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Understanding Peer-to-Peer Transfers

This guide to peer-to-peer payments has been designed to help our users understand the meaning and purpose of this category of money transfer. We will be discussing the definition of a peer-to-peer transfer, providing an overview of how they work and the different types of service providers.

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What is a peer-to-peer transfer?

A peer-to-peer transfer, also known as a P2P payment, refers to instances where money is sent and received between trusted contacts such as friends, family, colleagues and acquaintances.

Typically executed online through a money transfer provider website or mobile app, peer-to-peer transactions facilitate the sending of funds from one person to another, via internet or mobile network.

A few examples of common peer-to-peer payments include:

  • Splitting a dinner bill between friends

  • Paying monthly rent to a landlord

  • Dividing domestic payments among household members

  • Sharing the cost of a purchase with family members

How do peer-to-peer transfers work?

In most cases, peer-to-peer transfers are deemed more convenient than traditional bank transfers because users can simply select the recipient from their contact list, rather than having to enter bank details.

For example, you attend a work lunch with 2 colleagues, both of whom have agreed to split the bill with you. Rather than asking each guest at the table to pay using cash, you pay for the entire meal on your card.

When you get back to the office, you divide the bill by 3 and request this amount from each colleague using a peer-to-peer money transfer app.

Your colleagues will receive a notification for the requested amount, logging into the app or online platform by entering a secure password, PIN code or using fingerprint ID, and entering the amount due.

You receive money from both colleagues instantly, without needing to provide or request any bank details.

Some peer-to-peer payment platforms also function as a digital wallet, meaning funds can be stored and managed from the P2P account; while other platforms will deposit funds directly to the linked bank account or card.

What is a peer-to-peer money transfer app?

First made popular by digital payment provider PayPal, the concept of a peer-to-peer transfer has gathered momentum in the mobile app space.

Popular peer-to-peer payment apps include PayPal, Venmo, Cash App and Google Pay, all of which allow users to send money to their peers using a linked bank account, credit or debit card. The majority of these apps support domestic transfers only, and users will need to look elsewhere for international transfer services.

Check out our guide to the Best Apps for International Money Transfers

How much does a peer-to-peer transfer cost?

One of the biggest incentives for customers to use a peer-to-peer transfer service over traditional banking methods, is the fact they offer a free service between contacts based in the same country as you. Additional fees may apply to international payments and payments funded by credit card.

How long do peer-to-peer transfers take?

Again, this will depend on the service you are using and where you need to send the money, but generally speaking, another overarching draw of peer-to-peer payments is the provider’s ability to instantly request and deposit funds between known and trusted contacts.


As peer-to-peer payments grow in popularity, especially among smartphone users, a recent report anticipated that the global P2P payment market is expected to generate $9,097.06 billion by 2030. Online services and mobile banking continue to evolve and we endeavour to keep our readers in the know about all things related to money transfers. We hope this guide has provided you with enough information to feel comfortable making your first peer-to-peer payment; please see the Related Content section for further reading and other useful guides.

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April Summers
April Summers
April is a trained journalist and the Content Editor for She has 10 years experience writing about a diverse range of subjects, from financial services to arts and entertainment. When she's not writing about global remittances she can be found daydreaming about her next holiday abroad.