Many or all of the companies featured provide compensation to LendEDU. These commissions are how we maintain our free service for consumers. Compensation, along with hours of in-depth editorial research, determines where & how companies appear on our site.
For many Americans, carrying cash is a thing of the past. Beyond credit and debit cards, digital wallets allow anyone with a smartphone to make payments by pressing a few buttons or waving their phone in front of a scanner.
These apps are known as peer-to-peer (P2P) payment apps. They allow users to link a bank account, credit card, or debit card to the app, and then make payments to their friends, family, or anyone whose email address or phone number they happen to have. The apps work by facilitating the payments through the bank or credit card company, allowing for an instant transfer of money.
From there, users can store the funds in their mobile app account, or transfer it into their bank account. There are a variety of mobile P2P payment apps available, each with different strengths and weaknesses. Read on to learn more about three of these popular apps: Venmo, Zelle, and Circle Pay.
Let’s Learn a Little About Each
Venmo is one of the leading P2P payment apps. Launched in 2009, it has become one of the most popular services available, in part due to its social aspect that allows users to send comments or emojis along with their payments. In many ways, Venmo operates like a social media platform, allowing connected users to see payments and read comments from their friends.
Users can connect a credit card, debit card, bank account, or establish a Venmo balance on their account. Venmo does not charge a fee for transactions involving a debit card or bank account. However, all transactions using a credit card are charged a 3 percent processing fee.
Zelle is a P2P payment app offered through various banks, including Bank of America, Capital One, and Wells Fargo. It allows anyone with access to their bank’s app to send and receive money via Zelle. Currently, Zelle is offered through bank apps, but plans to launch a standalone app that will allow users to send and receive payments within minutes. These transactions must be funded by debit cards or bank accounts; Zelle does not support the use of credit cards. There are no fees associated with using Zelle.
Circle Pay is a relatively new payment app that allows users to send and receive money both nationally and internationally, all without fees. Users are required to link a bank account or debit card while signing up for an account through the website or app. Once on board, users can transfer or request money from their contacts through the app.
Users are allowed to cash out their balances instantly if their debit card is linked to their account. For international money transfers, the currency exchange rate is at a favorable mid-market rate. Like Venmo, Circle Pay has a social aspect, allowing users to send images, comments, and GIFs with their payment requests and transfers.
Comparing the Three P2P Apps
Venmo, Zelle, and Circle Pay are all similar in that they each allow registered users to easily send and receive money from other users. For each service, the transfers are free if you link them to a debit card or bank account. The transfers all happen quickly, or even instantly, and can typically be accessed by the recipient within hours or days. Each app offers a high level of security.
However, there are significant differences between the apps as well. Of the three, only Venmo allows the use of credit cards, and it charges a 3 percent fee for doing so. Many users might feel more secure using a credit card with a third-party app instead of linking it to their bank account.
For users that are concerned about security, Zelle might be the best option, as it can only be used by account holders of specific banks. When you sign up for Zelle you are not giving a third-party access to your bank account information.
Finally, while Circle Pay allows both national and international monetary transfers, its currency exchange rate and lack of fees make it stand out among the three apps for anyone looking to send money overseas.
Venmo, Zelle, and Circle Pay can each be used in a variety of situations, but there are times when using one app may be better than another. For example, if you need to send money to another country, then using Circle Pay is likely your best option, as its exchange rates and lack of fees will save you money.
If you are simply looking to send a friend $20 for your share of a bar tab — and perhaps you want to make a joke that will be seen by all of your other friends at the same time — then Venmo would be the best choice.
Finally, if you are wary about connecting your bank account to a mobile phone app and your bank offers Zelle, then using it may be the best way to keep your data and money secure.
Author: Jeff Gitlen