Peer to peer (P2P) payment platforms offer convenience, security and cost-effectiveness, making them a valuable asset in the arsenal of any business looking to meet customers where they are at, by allowing them to pay for goods and services in ways they are more comfortable with.
Here, we will explore 5 ways in which SMEs can best utilise them to accept payments:
1. Give business a boost: The pandemic greatly accelerated the popularity of P2P payment apps such as Venmo and Cash App; as of 2023, each has monthly active users of 83 and 53 million respectively (1,2). Consumers are very familiar with making payments among each other on these platforms and small businesses can capitalise on this familiarity by letting consumers extend their use to everyday purchases.
2. Go cashless at no cost: Setting up a business account on the most popular P2P payment platforms is free and fast with no contract required. Small businesses can begin taking cashless payments immediately without needing to sign a contract with a traditional acquirer or one of the larger Fin-tech POS providers – all attached with higher start-up costs due to the need to purchase card terminals (e.g., Contactless card readers from leading Fin-tech POS providers start at around $49.00 (3)).
3. Save time: Accepting payments through P2P platforms is faster than using cash. Customers can send the business the exact amount required for their purchase directly, either by using the email address registered to the business account or by scanning the unique QR code - eliminating the need for the business to issue change, and, if a business ever needs to issue a customer refund, this can be done from the P2P app straight back to the customer's personal wallet, quickly and at no cost. Further to this, Cash App business accounts don’t charge any fees for instant bank deposits, with small businesses able to see revenues reflected in their bank accounts instantly (4).
4. Robust security and fraud prevention: Fraudulent card transactions can cost small businesses a lot of money in chargeback fees, ranging somewhere between $20 and $100 (5). Using P2P platforms helps eliminate the risk of a chargeback, and platforms like Venmo offer Purchase Protection (6), protecting the seller if a buyer claims they did not authorise a payment or did not receive their item. Additionally, customers have the assurance of their purchase being protected against fraud, as Purchase Protection covers the buyer in cases where they do not receive an item or it is not as described.
5. Straightforward pricing model: For businesses just starting out keeping expenses simple can mean more time spent on nurturing growth and reinvesting profits. Business accounts on P2P platforms have simple and reasonable pricing structures, for example, Venmo charges 1.9% of each transaction plus a fixed fee of $0.10 (7), a lower cost than some of the major Fin-Tech POS providers.
What next? 3 ways in which small businesses can make the most of P2P platforms: