Mobile payment apps, like those offered by Venmo, Zelle, and others, are certainly convenient for person-to-person (P2P) transactions. Split the restaurant tab, pay a share of the cab ride, or send money to a kid who’s away at college. Zelle reported P2P payment activity of $25 billion during the first quarter of 2018 – an impressive increase of 15 percent from the previous quarter. These apps are also finding their way into the hands of business users. But there are at least four compelling reasons to avoid using P2P payment apps for business.
The Fees are Too High
Venmo charges merchants a 2.9% processing fee, plus a surcharge of 30 cents per transaction. These kinds of fees definitely generate profits for the payment app companies. But they can undercut the revenues of businesses who use the apps instead of alternative payment processing options, like NTC Texas that offer more competitive rates, often customized to the needs of the business.
Another drawback of P2P apps is that they don’t offer the kind of expense tracking and reporting capabilities that businesses need for accounting purposes. By contrast, point of sale apps created specifically for business may provide useful features such as inventory tracking, employee timekeeping, and expense and receipt management. When it comes to online payment processing, businesses can also take advantage of systems capable of simultaneously processing multiple forms of payment from multiple locations, including recurring or installment payments. P2P payment processing apps do not offer that level of flexibility.
Security and Privacy
Many P2P payment apps also let users share transaction data on social media platforms. Businesses may be uncomfortable broadcasting that kind of data to a wide online audience. Granted, social media marketing can be beneficial to a business. That’s why the option to manage social media marketing and customer loyalty programs is available with the mobile iPad Point of Sale System, which includes both inventory and credit processing. But that tool gives businesses more control, not less. The P2P app feature that facilitates sharing of transaction information on sites like Facebook may have the opposite effect. It could even potentially lead to an inadvertent compromise of corporate privacy or security.
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Rather than creating a direct connection between a financial account and a user, some P2P payment processing apps play the role of a middleman. So although notification of a transaction is sent instantly, the transfer of funds can be subject to delays. The same problems may arise when a business wants to do a refund through a P2P payment app. Payment app experts recently convened by the FTC also point out that transaction dispute resolution remedies may depend on the P2P app company’s particular policy.
The Bottom Line
There’s no doubt that P2P payment apps offer great potential for individual users. But they weren’t originally intended for business, and aren’t yet up to the task. Trying to re-purpose them for business applications may be like trying to redesign a family car to do the work of a commercial delivery truck. Despite good intentions, it may invite unjustifiable costs, delays, and consequences.