Two sets of hands hold smartphones near each other. The smartphone on the left, held slightly higher, shows a white screen with a green checkmark and the caption "Payment Completed." The smartphone on the right, held by a hand with French manicured nails, shows a QR code against a blue background.
There are a plethora of P2P payment applications, and business accounts are easy to set up. However, business owners should pay attention to fees and regulations on each platform. — Getty Images/Nattakorn Maneerat

Peer-to-peer (P2P) payment platforms have become accessible ways to buy and sell — and many small businesses adopt them. Not only are they generally secure, but they are very convenient forms of payment for businesses on the go.

If you’re thinking about accepting P2P payments at your business, here are some things you should consider.

How can your business accept P2P payments?

Peer-to-peer payments are easy to set up, with a variety of P2P platforms to choose from. The peer-to-peer economy is growing now more than ever, so businesses should act accordingly. Here are some important points to keep in mind when considering P2P payments.

Common P2P platforms

Here are some common P2P platforms to consider:

  • PayPal: PayPal as a platform is one of the first pioneers of P2P payments. It is a secure system that allows purchases with the touch of a button. These payments can be to or from businesses or customers, and the platform can keep track of multiple payment options for your convenience.
  • Venmo: Venmo allows businesses to create a business profile, which in turn will allow users to directly pay them through the application. Businesses have the options of standard transfers, which can take from one to three business days, and instant transfers, which cost about 1.5% of the amount transferred. Venmo also has a detailed FAQ section to assist with any further business-related questions.
  • Cash App: More than 70 million customers use Cash App. Not only is the system easy to use but, for businesses who use Square’s point-of-sale system, Cash App data can integrate into Square and display QR codes directly on checkout devices.
  • Zelle: Zelle has partnered with many individual banks across the country, which enables users to instantly transfer money to their accounts within minutes. While the system does not send 1099-K forms that list previous transactions, Zelle does not charge merchant fees and ensures the transfer of payments to your bank account within minutes.

[Read more: P2P Income Tax Reporting Requirements]

Business vs. personal accounts

Being able to register a business account has its advantages. Business accounts may be able to transfer a higher amount to your bank account in a single transaction. Business accounts also include proper tax forms, which can save time and effort in tracking all previous purchases.

The greatest feature P2P payments offer is convenience.

Another great feature of making a business account is trust. Customers can find your profile with ease and trust they’re sending the money to the right account. It is important to have a business account on P2P platforms because, now more than ever, many customers conduct digital transactions wherever they go.

[Read more: What is a 1099-K Tax Form?]

How to open an account

Opening an account may seem intimidating at first, but systems like PayPal and Venmo make it easy to set up. Just visit the platform’s website and sign up for either a business account or a personal account (depending on the site’s rules). From there, you’ll verify the account, fill out your business’s information, and get ready to accept P2P payments.

[Read more: 10 Nonbank Lenders for Small Businesses]

Considerations for taking P2P payments

Businesses have a lot to consider when debating whether taking P2P payments is right for them. The greatest feature P2P payments offer is convenience. For instance, it’s convenient for small businesses such as mobile dog groomers, landscapers, and house cleaners to have on-the-go transactions that occur within minutes of the service. When doing routine services, P2P payments are also on the safer side, with the business owner being able to see the notification of the payment.

While secure and convenient, there are many disadvantages as well. There are so many different P2P systems in place that the process of managing transactions can become overwhelming. In addition, the account-making process can burn up a lot of valuable time contributing to the business. Except for Zelle, many platforms also have merchant fees that take away from net revenue, which can hurt many small businesses. These fees can add up very quickly, and take away a lot of money that, if paid in cash, would have gone to the business.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published July 12, 2022