Nervous about person-to-person payment platforms? Read this first...

Key takeaways:

• Person-to-person (P2P) payment platforms allow you to quickly pay or request payments from family, friends and people you know.
• MidWestOne uses Zelle® – a fast, safe and easy way to send and receive money.
• With Zelle®, each person on your checking account can use the platform from the same account. 
• Understanding how P2P platforms work will help alleviate any concerns you may have about using the apps.

According to an eMarketer study, more Americans are paying each other using mobile apps than ever before. The total value of mobile person-to-person (P2P) transactions is predicted to rise from $156.49 billion in 2018 to $244.03 billion in 2021.

Platforms such as Zelle® allow you to quickly pay your family, friends and people you know on your phone directly from your bank account. From splitting the bill with friends at a restaurant to quickly providing gas money to the parent carpooling your kids, P2P payment platforms offer a quick and convenient way to pay.

PayPal was one of the first online tools to pay family and friends. Now Google, Venmo (which is owned by PayPal), Square and others offer similar services. P2P payments are also available through banks and credit unions, and, as their prevalence increases, they’re even available on social media networks.

If the frequency of data breaches and a lack of understanding on new technology still has you feeling nervous about using a P2P payment platform, here are a few answers to common questions:

Why would I use a P2P payment platform?

It’s simple: P2P payment platforms are convenient. Rather than needing an exact amount of cash, you can transfer money within minutes to family members, friends and people you know. You can pay your babysitter at the end of the night or buy your mom her birthday gift and have your siblings quickly pay you back. It’s a convenient, easy way to move money from one person to another.

How do P2P payment platforms work?

Say you want to go to the movie with a friend. Your friend buys tickets online and when you meet him at the door you want to pay him back. Instead of writing a check or fumbling for cash, you reach for your phone and open your app. You pick your friend’s name, enter the amount you owe him and hit send. A few minutes later, the money lands in your friend’s bank account. Easy peasy.  

Is a P2P payment platform secure?

While each P2P platform has its own security platform, Zelle® is the only platform created and backed by actual banks. This means that Zelle® uses the same technology used to protect your bank account. In addition, Zelle® uses authentication and monitoring features to make your payments more secure.

Even though the platform itself is very secure, you still need to take precautions to ensure your money ends up with the person you intend to pay rather than a stranger. Double-check the person you’re sending a payment to or have that person request a payment from you to ensure your money goes to the correct person.

Will my friends and family members have access to my bank account?

No. When you enroll with Zelle®, your sensitive account details aren’t shared. Those stay with MidWestOne. When someone sends money to your enrolled email address or U.S. mobile number, Zelle® looks up the email address or mobile number in its “directory” and notifies MidWestOne of the incoming payment. MidWestOne then directs the payment into your bank account, all while keeping your sensitive account details private.

What if my family and I share the same banking account?

Zelle® allows you and your family to connect to the same account. Unlike other P2P payment platforms which only allow one user to be connected to the checking account, Zelle® is offered to each person on the banking account. Zelle® then logs activity by person, so you can keep track of your family’s activity on the platform.

Are there fees associated with using Zelle®?

MidWestOne does not charge any fees to use Zelle®.

Zelle® is already available within MidWestOne Bank’s mobile banking app and online banking. You can check the app or sign in online to follow a few simple steps to enroll in Zelle®. You must provide your email address or U.S. cell phone number to enroll.

Platforms such as Zelle® offer a multitude of benefits. While you may have trepidation about using a new system for paying your family and friends, once you become accustomed to it, you’ll wonder how you ever went through the hassle of finding the exact cash to pay your family member back or waiting weeks for friends to pay you back.

If you have more questions about Zelle®, you can find answers here.

MidWestOne Bank does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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