Today, sending and receiving money is easier than ever. Whether it is through online platforms or mobile applications, the options for moving money around are seemingly endless.
Digital payments have become more convenient and faster. Instead of sending or receiving cash, checks, or traditional methods like bank wires, there is now the option of sending money instantly using your smartphone or computer.
One type of system that has taken the market by storm is peer-to-peer (P2P) payments. P2P payments let you send money directly to other people rather than through the bank. Peer-to-peer payments platforms allow users to easily transfer money to other people directly.
We have put together this guide to explain everything you need to know about P2P payment systems with a focus on Jeton’s flexible platform. We will cover how they work, the benefits and drawbacks, features of Jeton, and more.
By the end, you will have a solid understanding of these exciting payment methods and why Jeton is the best for your needs. Let’s start by understanding the fundamental features of P2P payments!
Understanding P2P Payments: How Do They Work?
A peer-to-peer payment system is the process of sending money directly to another person using a computer or smartphone. This means that you can now pay a friend back for lunch or even receive payment from clients across the world through this technology.
When it comes to the functionality of P2P payment platforms, all you need to do is to link your bank account, debit card, or wallet to your P2P account.
Then you choose who you want to send money to and how much you want to send. This is followed by the system debiting your account and crediting the receiver’s account within seconds or minutes, irrespective of the location.
Popular P2P payment platforms, such as Jeton, utilize banking partners and payment processors to swiftly move money from one bank account to another in different countries or even currencies. The infrastructure is such that what used to take days to complete has now been streamlined into a one-tap process.
The Advantages of P2P Payments
There are various reasons why P2P transactions are quickly gaining traction over the old-school payment methods, and these include:
- Convenience: Instead of standing in a queue at the bank, writing a check, or changing your currency, these apps now make it possible to online money transfer to a person in your pocket. You can send and receive money from any location, anywhere and at any time.
- Speed: It only takes seconds or minutes to receive payment when using a P2P platform, while the same funds might take days to arrive if you used a check or a wire transfer. You can get the money when you need it.
- No or Low Transaction Fees: Most P2P services provide basic personal transfers for free. Even the paid services are generally much cheaper than wire, bank transfer, or currency exchange fees.
- Global Access: You can now easily make payments internationally, whether you’re paying for an overseas package or ordering an item online. It is just as easy to send money abroad as it is to send money to a neighbor next door.
- Ease of Use: The user-friendly design of the app and website has made it so that P2P payment is straightforward. Some platforms even have a social component, where you can ask to be paid back from a friend and track the payment from within a chat box.
All the benefits mentioned above contribute to why P2P payment systems are popular. For instance, if you want to split a bill with a friend or collect payment from your clients, P2P services are convenient and faster. What is more, you can pay your staff without having to carry a bunch of cash or a check.
The Disadvantages of P2P Payments
With any kind of digital service, there are downsides, and this includes P2P payment systems. These downsides include:
- Security risks: P2P payment platforms are secure, but like any other digital service, they are not 100% foolproof. There are still risks of malware, hacking, and human errors. If your login information gets compromised, your funds are susceptible to theft.
- Privacy: Some people find the social aspects and public history of transactions to be a plus, but others may find them a minus. In a world where privacy is essential, this could be problematic. Your financial information might be at risk based on the platform’s privacy policies.
- Transaction fees when withdrawing: P2P services let you send funds to others for free, for example, if you use the main P2P apps. However, withdrawing funds through a P2P exchange is still charged with fees, including exchange fees, withdrawal fees from your bank, or even minimum balance restrictions on the linked bank account.
- Technical knowledge needed: The newest generations have grown up with this type of technology, so it is easy for them to learn how to send money to their friends or other people. But for those without such a background, there is a learning curve. Technical difficulties and scammers targeting the unaware remain issues.
- Lack of control: Since you are reliant on a third-party company for all your financial transactions, there are risks from technical outages, changing policies, or a company going out of business.
Although these issues are real, the speed, affordability, and ease of use of P2P transactions often outweigh the P2P pros and cons. Moreover, innovations and improvements are continually being made to counter the drawbacks over time.
The Future of P2P Payments
We can safely say that the future of P2P payments is very bright, and here are some of the reasons why:
- Emerging Markets Are Adopting P2P: Smartphone penetration rates are rising in developing countries, and they are rapidly adopting P2P payments. Within the next 5 years, more than half of Sub-Saharan Africa will use mobile payments.
- P2P Payments Integration: While other P2P platforms allow users to make payments from within a messaging platform, social media platform, ride-hailing service, food delivery platform, and many others, they are now opening up APIs to integrate payment into more services. Payments are becoming more invisible and integrated into your everyday life.
- Crypto Adoption: As cryptocurrency becomes more widely accepted, P2P platforms will become key enablers for direct digital asset transfers between individuals, which is already possible through services like Jeton.
- Real-time payments: New instant money transfer rails will allow the ability to clear payments instantly, irrespective of the P2P payment processor. If we get there, P2P will be even closer to the speed of cash and liquidity.
- AI: Artificial intelligence will continue to improve fraud detection, customer service, money management tools, and many more. P2P payments will continue to get smarter, automated, and personalized.
The evolution of money movement between people will be facilitated by P2P payment platforms, such as Jeton, making it easier to pay anywhere around the world. Its future is looking bright.
What Is P2P in Cryptocurrency?
In the world of cryptocurrency, P2P or “peer-to-peer” means the ability to exchange digital assets directly between two people. One of the most common ways to do this is through services like Jeton, which let you buy, sell, and trade digital currencies like Bitcoin, Ethereum, and many more directly from your crypto wallet.
Unlike centralized exchanges that act as intermediaries, P2P crypto exchange enables you to post bids and offers publicly or directly with each other. The money then gets transferred directly between the wallets of the counterparties once an agreement has been reached.
This process eliminates the need for most of the fees that come with the traditional exchanges. It also gives you full control and ownership of your private keys instead of trusting a third party to hold your assets.
However, P2P crypto trading does come with risks such as scammers, technical issues, or the lack of consumer protection that is guaranteed on regulated platforms. Experienced digital currency owners will find P2P cryptocurrency exchange a compelling option, while new entrants can leverage services like Jeton to simplify the onboarding process.
P2P points to a promising future of direct, permissionless value transfer between individuals on a global scale. However, P2P security risks, privacy, and technical difficulties remain issues that are being improved over time.
On the flip side, speed, global access, and intuitive interfaces continue to be at the forefront of why P2P payment platforms like Jeton are continuing to gain in popularity. The ongoing integration with our everyday life services and the possibilities with cryptocurrency pave the way for an exciting future.
For individuals looking for an easy way to send and receive money, especially from abroad, you can set up an account with Jeton and start paying friends directly.
Similarly, if you are a business owner looking for a cost-effective way to pay your team, try opening an account with Jeton. With its global coverage, no or low transaction fees, and direct crypto trading options, Jeton is an excellent all-in-one payment platform worth trying.
What Is the P2P Process in Crypto?
While traditional P2P payment systems let you send money directly to another person, P2P exchanges in crypto go a step further. Instead of simply moving funds, P2P crypto exchanges allow buying and selling of digital currencies between users.
On a P2P crypto exchange, you post a bid and ask for a specific cryptocurrency. For example, one person might post an ad selling 1 Bitcoin for $30,000 USD, while another posts an ad to buy 1 ETH for $2,000.
The process works similar to a regular marketplace. Once a match is found between a buyer and seller, the escrow holds the funds until the transaction completes.
Many popular P2P crypto exchanges even have reputation and feedback systems to encourage trust between users. Once the transaction is complete, the money is released to each party. In this way, you do not need a middleman like a traditional exchange.
P2P Exchanges vs Conventional Crypto Exchanges
P2P and centralized crypto exchanges allow you to buy and sell digital currencies, but there are differences between the two models:
- Anonymity: P2P exchanges don’t require extensive KYC/AML verification processes, so you can trade without having to reveal your identity. This makes P2P transactions more privacy-friendly and suitable for instant money transfer needs.
- Fees: Because there isn’t a middleman taking a cut, P2P exchanges have lower trading fees. However, a seller may add his/her own fees to the price.
- Liquidity: Centralized exchanges have much higher trade volumes and liquidity for the major coins because of their larger user base. P2P liquidity depends on the number of active users.
- Security: Because the centralized exchange is holding your funds, there’s a potential risk of hacking. If the security of the platform fails, then there’s a risk of a breach. P2P exchanges do not hold funds, so this risk is eliminated. However, you should be careful when vetting your counterparties.
Some of the advantages of a P2P crypto exchange for privacy, low fees, and lack of third-party custody of funds are evident. However, centralized exchanges have a much higher liquidity needed for high-volume and institutional traders.
What Are the Benefits of a P2P Crypto Exchange?
P2P crypto exchanges are an alternative to centralized exchanges, offering several benefits for casual and advanced cryptocurrency users alike:
- Anonymity: As mentioned above, P2P exchanges do not require extensive KYC checks. If you want to trade pseudonymously, you can.
- Avoid custody risk: Because the funds are in escrow and are only released when the trade is complete, P2P exchanges remove the risk of hacking or security breaches that could result in your funds being lost on a centralized exchange.
- Potentially lower fees: P2P exchange fees are lower than centralized platforms, although sellers can build fees into the price of the asset. Additionally, trading fees on centralized platforms may be high and may include spreads on top of fees.
- Access to new markets: P2P exchanges let you access market niches where you can buy and sell pairs not yet available on centralized exchanges, enabling instant money transfer across diverse markets.
- Convenience: Many P2P exchanges integrate with wallets like Jeton so you can easily fund and online money transfer quickly. Some even offer mobile apps so you can trade on the go.
If you want more control, lower fees, and access to niche trading opportunities, a P2P cryptocurrency exchange may be the perfect alternative to a centralized platform.
What Is the Difference Between P2P and Decentralized Exchange?
Both P2P and decentralized exchanges allow you to buy and sell digital currencies without a centralized exchange. However, there are some differences between the two:
- Order matching: P2P exchanges operate on an order book model, where users post bids and asks. DEXs use on-chain liquidity pools and automated market makers to match orders.
- Escrow: P2P exchanges use a third party to hold funds in escrow until the trade completes. DEXs process trades and release funds through smart contracts on the blockchain.
- Fees: P2P exchange fees tend to be lower because the escrow is handled by a third party. DEX fees are built into liquidity pools and automated market makers.
- Anonymity: P2P exchanges allow you to trade pseudonymously if you want to. DEXs preserve anonymity because no personal details are collected.
- Custody: P2P exchanges act as an intermediary to hold funds in escrow. DEXs have no central authority and do not hold your funds like a traditional exchange.
DEXs offer a higher level of decentralization because there is no central authority involved. Nonetheless, P2P platforms are favored for their P2P pros and cons, such as lower fees, escrow protection, and easy fiat access via platforms like Jeton.
Why P2P Exchanges Could Be the Future of Trading
P2P exchanges are in a strong position to potentially replace centralized exchanges as the primary means of trading for several reasons:
- Decentralization: As part of the crypto ethos, peer-to-peer platforms remove the middleman, aligning with the principles of P2P security.
- Privacy: With increasing regulation of the space, more traders are seeking anonymity offered by P2P exchanges without needing to do KYC checks.
- Accessibility: The ability to use mainstream payment solutions like Jeton makes it easier for new users who aren’t experienced in crypto to access the market.
- Fees: P2P exchange fees are often nominal compared to the fees and spreads charged on centralized platforms that need to make a profit.
- Security: While P2P security risks are minimal, centralized exchanges have suffered several major security breaches and hacks, making traders more wary.
- Innovation: As the market matures, P2P DEX hybrids may emerge that incorporate the best of both decentralized and P2P-powered order matching.
If you are ready to take advantage of the convenience and reliability of P2P payments, sign up for a Jeton account today! It is easy to set up and takes just a few minutes.
Once your account is ready, you will be able to send and receive money within minutes, utilizing mobile payments and digital payments seamlessly. See why Jeton is trusted by millions for all of their financial needs.
Send and receive money—quickly, securely, and globally. Jeton’s peer-to-peer payment system lets you transfer funds in seconds, protected by powerful features like Two-Factor Authentication.
Open your Jeton account today and experience the freedom of safe, instant P2P transactions. Download the Jeton App now on Google Play or the App Store and start sending smarter.
