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How to make person-to-person payments with your phone and get rid of cash for good

Posted May 7

Gone are the days when one person gets stuck with the check for dinner, while everyone else tries to come up with exact change in cash. No more buying the group Mother’s Day gift and waiting forever for your siblings to pay you back. Peer-to-peer payment options are here and taking the world by storm. Or are they?

Peer-to-peer payment, also called person-to-person payment or P2P, is the ability to digitally pay one another with accounts linked to banks or credit cards. I started using one such app about a year ago when I bought concert tickets for a large group of friends, and many of them paid me back through Venmo. Since then, my friends and I have used P2P to reimburse each other for everything from girls trips to birthday gifts. In my circle of friends (mostly people in their 40s), using these apps is common and often preferred. I thought everyone on earth was using this simple form of payment. I was wrong.

Only about 20 percent of adults use mobile payment options. It must be a generational thing, right? For sure, millennials use this technology, right? Wrong, again. Even for those 18-34, consulting firm Accenture says only about one-third use P2P apps.

You may guess that’s because people just use debit and credit cards, but, surprisingly, 85 percent of the world's transactions happen with cash.

It’s time to get rid of germ-ridden cash and go mobile, if for no other reason than being able to truthfully tell your children you have no cash when they ask for it every single day.

There are dozens of P2P payment apps, with many companies jumping on board. Even Facebook gives you the ability to pay through its app. Because their success depends on how many people download apps, I’ll highlight the most popular.

PayPal (iOS and Android) had a head start when it went mobile because it already had so many online users. Today, it has 173 million users and is compatible with credit and debit cards from major banks. You can add your loyalty cards to the app, which can lighten your wallet quite a bit. If you pay with a credit or debit card, there is a fee of 2.9 percent plus 30 cents, and the weekly maximum for requests or payments is big: $10,000. A bonus is the ability to use your fingerprint sensor to log in (if your phone allows it).

Venmo (iOS and Android) allows you to pay or request payment using a credit card, a debit card, a checking account or Venmo balance. Money transfers are free unless you use your credit card, and then the fee is 2.9 percent. You can send or request payment up to $3000 per week, and it will easily split a dinner check for a group. This app has a default setting that shares the basics of your transaction (who, what, how much) with everyone. Change that, if it bothers you. Venmo claims it will transfer the money within one business day, making it the fastest P2P option.

Square Cash (iOS or Android) links with a debit or credit card, with debit transfers free and credit transfers charging a 3 percent fee. Square Cash will take one to three days to transfer the money to your bank account unless you fast-track it for a 1 percent fee. One reason to use this app over the others is you don’t have to set up an account to use it. If someone owes you money, simply email that person and put the amount in the subject. When you CC the email to request@square.com, both parties enter their banking information, and the transaction goes through in two days.

I’m sure some of you are wondering if these apps will keep your information safe. Every one is encrypted. In fact, mobile banking may be more secure than doing it from your laptop, according to security expert Jason Soroko. He told CNBC individual apps infected with malware won’t spread to other areas of your phone, but that’s not always the case with a PC.

Millennials are six times more likely than baby boomers and members of Generation X to use one of these apps. I’m calling on my fellow Gen Xers to jump on the P2P train with me and help get rid of cash for good.

Amy Iverson is a graduate of the University of Utah. She has worked as a broadcast journalist in Dallas, Seattle, Italy, and Salt Lake City. Amy, her husband, and three kids live in Summit County, Utah. Contact Amy on Facebook.com/theamyiverson

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