What Are P2P Payments and How Can Businesses Use Them: 2025 Best Guide

What Are P2P Payments and How Can Businesses Use Them?

By p2pbusinesspayments July 23, 2025

Peer-to-peer (P2P) payments are electronic money transfers made directly from one person to another through a third-party application. These services—like Venmo, PayPal, Zelle, and Cash App—allow users to send money with a few taps on a phone or clicks on a computer, offering a convenient alternative to cash, checks, or traditional card payments.

Initially popular for splitting bills or reimbursing friends and family, P2P payment apps have evolved into powerful tools that even businesses can leverage for fast, convenient transactions. In this article, we’ll explain what P2P payments are, how they work, and explore how businesses can use P2P platforms.

We’ll compare popular P2P services (Venmo, Zelle, Cash App, PayPal, and others) – examining their features, fees, transaction limits, and suitability for business use. We’ll also discuss legal and tax compliance considerations, security risks, limitations, best practices, and answer frequently asked questions for businesses considering P2P payment apps.

Introduction to P2P Payments

P2P payments (peer-to-peer or person-to-person payments) refer to transactions that let individuals transfer funds to each other electronically, typically via a mobile app or website. Unlike traditional payment methods, P2P apps cut out many intermediaries – money moves directly from the sender’s funding source to the recipient (often through an intermediary account managed by the app).

Each user links a bank account, debit card, or credit card to their P2P app account. When a payment is initiated, the app either pulls the amount from the sender’s linked funding source or from their in-app balance and then credits the receiver’s app balance or bank account.

Originally emerging in the consumer space (PayPal was one of the first, launching in the late 1990s as a way to facilitate payments for e-commerce and between individuals), P2P payment platforms have since proliferated on smartphones.

Today, millions of people use apps like Venmo, Cash App, Zelle, and PayPal to send money instantly for everything from sharing a restaurant check to paying a landlord. The convenience of using a phone as a “digital wallet” has driven P2P payment volumes into the hundreds of billions of dollars per year.

Key characteristics of P2P payments include:

Digital convenience: Transactions are initiated through an app or website with a few taps, anytime and anywhere, often completing within seconds or minutes.
Linked accounts: Users must connect a funding source (bank account, card, or stored wallet balance) to send and receive money.
Low cost (for consumers): Most P2P services charge little or no fees for basic personal transfers (though fees may apply for certain funding methods or instant withdrawals).
User identifiers: To send money, you typically find the recipient by username, email, or phone number within the app – no need to exchange routing or account numbers directly.
Use cases: Initially designed for personal use (splitting expenses, gifting, paying friends), but increasingly used by small businesses and independent sellers for quick payments.

While P2P stands for “peer-to-peer” meaning person-to-person, businesses have started to tap into these platforms as well. In the context of business, P2P payments might mean a small business owner accepting a payment from a customer via a P2P app, or a company using a P2P service to send money to a contractor or vendor. The lines between “consumer” and “business” usage are blurring as P2P platforms roll out features for commercial transactions.

How P2P Payments Work for Businesses

For businesses, using P2P payment apps can offer several benefits: speed, simplicity, and ubiquity. If your customers already have a preferred P2P app on their phone, accepting payment through that app can be frictionless.

For example, a local craft seller might accept a Venmo payment from a customer, or a freelance consultant might get paid via PayPal or Cash App. Funds show up almost immediately in the app balance and can typically be transferred to a bank account within one to two days (or instantly for a fee).

However, it’s important to understand that most P2P platforms were originally built for personal use, not business transactions. As such, when a business uses a P2P service, there are special considerations:

Business accounts vs. personal accounts: Many P2P providers require businesses to create a designated business profile or account to accept payments for goods and services. Using a personal account for business transactions may violate the app’s terms of service.

For instance, Venmo’s user agreement prohibits personal accounts from receiving business payments – if they detect a personal Venmo being used for sales, they can reverse the payments or suspend the account. Cash App similarly requires switching to a business account to accept payments as a business. PayPal has long offered separate business accounts.
Fees for commercial transactions: P2P apps earn revenue by charging fees on business-related payments. While sending money to a friend might be free, business payments typically incur a processing fee similar to credit card fees. We’ll detail specific fees per platform below, but expect a roughly 1.9%–3% fee on the payment amount when using P2P apps for business sales.

The payer (customer) usually isn’t charged; instead the fee is deducted from the amount the business receives. This is akin to how merchant credit card fees work, and it’s why using the proper business service (and paying the fee) is important – it also often comes with features like record-keeping and compliance support.
Tax reporting and record-keeping: When a business receives payments through P2P apps, those funds count as business income and need to be reported for tax purposes, just like any other revenue. As of recent IRS rule changes, P2P platforms (as “Third-Party Payment Processors”) are required to report to the IRS if a user’s business transactions exceed certain thresholds (we’ll cover specifics in a later section).

Many P2P apps’ business profiles will provide tax documentation to you, and some even offer tools like transaction histories categorized for taxes. Nevertheless, it’s wise for businesses to keep their own records (receipts, invoices) for each P2P payment received, since the level of detail on a P2P transaction log may be minimal (often just a name, date, and amount).
Speed of settlement: One advantage of P2P systems for business is the speed of funds availability. Traditional credit card merchant deposits can take a day or two to settle; in contrast, P2P payments are often instantaneous – the money appears in your app balance right away.

Services like Zelle deposit directly into your bank account within minutes for enrolled users. This can improve cash flow for a small business. Keep in mind, though, that moving money from some P2P apps to your bank instantly may cost an extra fee (typically around 1.5% for instant withdrawal), whereas a standard 1-2 day transfer is free.
Usage scenarios: Businesses might use P2P payments in various ways. Customer sales are common – e.g. a food truck or market vendor taking Venmo or Cash App from customers who prefer it over cash. Some businesses also use P2P apps for paying suppliers or contractors, or even reimbursing employee expenses.

However, note that business-to-business usage may be limited by factors like transaction size limits or the other party’s comfort with the platform. Many P2P apps are best suited for small-dollar transactions, and larger companies might still prefer ACH transfers or wire for big payments.

In short, P2P payments can be a useful tool for small and medium businesses, offering convenience and speed. But to use them effectively, a business must choose the right platform and follow the platform’s rules for commercial use. Next, let’s compare some of the most popular P2P payment platforms and how each can fit (or not fit) business needs.

P2P Payment Platforms: Venmo, PayPal, Zelle, Cash App, and Others

Many P2P payment apps are available, each with different features and policies that are important for business use. Below we provide an overview of the major players and how they stack up for businesses:

Venmo for Business

Venmo is a hugely popular P2P payment app (owned by PayPal) known for its social feed and ease of use among consumers. Originally meant only for friends/family payments, Venmo introduced business profiles in 2020 to allow small businesses and sellers to accept Venmo legally. Key points for Venmo:

Business Profile vs Personal: Businesses on Venmo must create a Venmo Business Profile linked to a personal account. This profile allows you to accept payments for goods/services. Using a personal Venmo account for business transactions is not allowed – Venmo may review and reverse payments if a personal account is used for selling something. By switching to a business profile, you agree to Venmo’s business terms and gain access to business features.
Fees: Receiving payments to a Venmo business profile incurs a seller transaction fee of 1.9% + $0.10 for each payment of $1 or more. For example, a $100 payment would net you $98.00 after fees. Customers are not charged any fee to pay you (even if they use a credit card to fund the payment).

Aside from the per-transaction fee, Venmo doesn’t charge setup or monthly fees for business profiles. If you want to transfer the money out instantly to your bank, there’s an additional 1.75% instant transfer fee (capped at $25), but standard ACH transfer is free (usually 1-2 days).
Transaction limits: Venmo limits how much you can send or receive. For business profiles, the single transaction limit is $4,999.99 per payment. This means Venmo isn’t ideal for very large sales above ~$5,000 in one go. Venmo also imposes weekly rolling limits on payments sent from your account (often around $6,999/week for verified users combined personal+business). However, incoming payments to business profiles generally aren’t limited aside from the per-transaction cap. It’s mainly a consideration if you also use Venmo to spend money.
Business features: A Venmo business profile comes with added features: the ability to embed Venmo payment buttons in online checkout (via PayPal or Braintree integration), a dedicated Venmo QR code you can display for easy in-person payments, and options to share business info and get discovered in the Venmo social feed.

Venmo also provides transaction receipts to customers via email and supports partial refunds from the business side. However, Venmo’s app is still simpler than a full POS system – you won’t get sophisticated inventory or invoice management directly in Venmo (though you can issue simple payment requests).
Buyer/Seller protection: Venmo offers only limited buyer/seller protection compared to something like PayPal. Venmo transactions are considered final unless marked as a goods-and-services payment, and even then, Venmo’s buyer protection program (for authorized business profiles) is not as robust as PayPal’s.

Disputes on Venmo can happen if a payment was unauthorized (fraudulent), but Venmo does not mediate typical buyer complaints (e.g. item not delivered) for peer payments. They do facilitate chargebacks if a customer paid with a linked card and disputes through their bank, in which case the business might lose that payment.
Use case suitability: Venmo is widely used by younger consumers, so many small B2C businesses (boutique retailers, food vendors, artisans) like to offer it as a payment option. It’s easy and instant. For example, a market stall can display a QR code for their Venmo business profile, and a customer can scan and pay in seconds from their phone.

Venmo is not designed for international payments or formal invoices – it’s primarily domestic (U.S. only) and works best for relatively casual transactions. If your business caters to an audience that already lives on Venmo, adding it can be a convenient plus.

PayPal for Business

PayPal is one of the oldest online payment platforms and effectively the “original” P2P service (founded in 1998). Unlike newer apps, PayPal was always designed to handle both person-to-person and commercial payments (eBay’s growth in the 2000s was fueled by PayPal). Today, PayPal offers robust business tools and is a common payment method for e-commerce, invoicing, and services. Key points for PayPal:

Accounts and usage: PayPal allows users to have personal accounts or upgrade to a business account. If you’re using PayPal for any significant business activity, it’s recommended to use a business account (which lets you operate under a company name, integrate payment buttons on websites, etc.).

With PayPal, even personal accounts can technically receive payments for goods/services, but they will be subject to fees and reporting if you do so. PayPal’s user interface distinguishes between sending money to “friends and family” (personal payments) and “goods and services” (business payments).
Fees: PayPal’s merchant fees are a bit higher than Venmo’s. For domestic payments received for goods and services, PayPal usually charges 2.99% of the transaction (recently streamlined from an older 2.9% + $0.30 structure). If you integrate PayPal Checkout on a website, the fee might be 3.49% + $0.49 per transaction (this higher rate covers the cost of offering credit card options, PayPal Credit, Venmo, etc., through PayPal’s platform).

For in-person transactions via a PayPal QR code, fees are lower (for example, ~1.90% + $0.10 for transactions above $10). There’s no monthly fee for a standard business account; PayPal makes money from the per-transaction fees. Instant transfers from your PayPal balance to your bank cost 1.5% (no cap) for business accounts, but standard withdrawals (1-2 business days) are free.
Transaction limits: PayPal can handle much larger transactions than most P2P apps. A verified PayPal business account has no explicit send/receive limits aside from risk-based checks, meaning you could receive thousands of dollars in one payment.

For very high amounts, PayPal might temporarily hold or review the transaction for security, but generally it’s built for e-commerce volumes (some merchants do millions through PayPal). Initially, unverified accounts have receiving limits (often ~$500) until you verify your identity/bank. Once verified, PayPal is suitable even for big ticket items or large monthly volumes, unlike consumer-focused apps that cap you.
Business tools: PayPal shines in offering features tailored to businesses. You get the ability to send detailed invoices, set up subscription billing, and use PayPal’s Purchase Protection program which can increase customer trust (customers know they can dispute if something goes wrong, and PayPal will investigate). There’s also Seller Protection for eligible transactions (e.g. if you ship to the address provided and have proof, PayPal may protect you if a buyer fraudulently disputes).

PayPal integrates with shopping cart systems, has buttons you can embed online, supports international payments in many currencies, and even offers working capital loans to businesses based on sales history. In short, PayPal is the most business-heavy of P2P options. The trade-off is that fees are a bit higher and the signup process may require more business info. But for any business that’s scaling up, PayPal can grow with you.
Customer base: PayPal is nearly ubiquitous online – over 426 million active accounts worldwide. Many customers (especially in the U.S.) are comfortable using PayPal to pay for goods. If you operate an e-commerce site or freelance, accepting PayPal is often expected.

For point-of-sale in a physical store, PayPal isn’t used as widely (though the QR code option exists, it’s not as commonly asked for as, say, Venmo or Cash App in casual settings). But PayPal is a strong choice if you need an all-in-one solution for online and cross-border transactions or if you want the safety net of its dispute resolution systems.
Note on Venmo vs PayPal: Since PayPal owns Venmo, some of their features are converging. For example, online merchants can add a “Pay with Venmo” option via PayPal Checkout, which then charges the same fee as PayPal (around 3.49%+49¢).

Venmo is more of a mobile-social brand, whereas PayPal carries a more formal, transactional image. Businesses might even choose to offer both: Venmo for the casual convenience to customers and PayPal for more formal invoicing or non-mobile customers.

Cash App for Business

Cash App (by Square, Inc. – now Block, Inc.) is another popular P2P payment service in the U.S. Like Venmo, Cash App started as a way for friends to send money but later introduced business accounts (often called “Cash for Business”).

Cash App is known for its simplicity (users have a unique “$Cashtag” handle to receive payments) and for offering features like Bitcoin and stock purchases on the consumer side. For businesses, here’s how Cash App stacks up:

Account type: A Cash App user can toggle their account to business mode in the app settings. If you accept payments as a business (for goods or services), you are expected to set your account as a business account. In practice, some sellers might be tempted to use personal accounts to avoid fees – but similar to others, Cash App will charge fees on payments it detects as business transactions. It’s best to be above-board and use the business setting, which comes with proper reporting and no send limits.
Fees: Cash App business accounts pay a transaction fee on received payments. The standard rate is 2.75% per transaction (this was the long-standing rate). Recent updates indicate Cash App’s fee is 2.6% + $0.10 or similar (they adjusted in 2025), but roughly it’s around 2.5 – 2.75%. If a customer sends you $100 via Cash App to your business account, you’d get about $97.25.

Like others, Cash App doesn’t have monthly fees and it’s free for customers to send payments (unless they use a credit card on personal mode, which incurs them a 3% fee – one reason many consumers fund via debit or bank). Instant deposit fees for Cash App are 0.5% – 1.75% depending on amount (with a $0.25 minimum), which applies if you want to move your balance to your bank instantly; otherwise standard deposits are free, typically next-day.
Transaction limits: One advantage of Cash App for Business is no cap on incoming payments – you can accept an unlimited amount of money through Cash App over time. Many small businesses find this useful so they’re not constrained if they suddenly have a good sales day. However, sending/spending limits do apply. Verified Cash App business accounts can send up to $7,500 per day, $17,500 per week, and $25,000 per month from the account.

This is a relatively high outgoing limit which could be useful if you also use Cash App to pay suppliers or refunds. (By comparison, unverified personal Cash App users are limited to sending $250/week and receiving $1,000/month until they verify identity.) Also, note Cash App imposes a $25,000 per-week limit on transferring funds to your bank from a business account – effectively, you can cash out up to $25k of your Cash App balance to your bank in a single transfer or over a week, which is plenty for most, but something to keep in mind if you routinely process very large volumes.
Features & differences: Cash App for Business provides some helpful features:
- You can collect payments via multiple methods: sending your $Cashtag or business username to customers, having them scan your Cash App QR code, or even integrate Cash App Pay on a Square point-of-sale or online checkout.
- Cash App business accounts come with basic reporting: the app can provide a year-end report of payments received. They also have “tax documentation and management tools” built-in, which likely refers to providing Form 1099-K if thresholds are met and giving access to transaction history.
- Square integration: Since Cash App is part of Block (formerly Square), businesses using Square POS can accept Cash App payments from customers (for example, a customer can scan a QR code at a Square terminal to pay via their Cash App balance). This bridges the gap between a casual P2P app and a formal POS.
- Receipt requirements: Cash App has some unique rules – according to their policies, business users should provide customer receipts for transactions over $15, and require a customer signature for transactions over $25. This is to ensure there’s a record of the sale, likely for dispute purposes. Essentially, treat it like a real sale (issue a receipt) even if the payment method is Cash App.
- Prohibited businesses: Cash App does not allow certain high-risk activities (e.g. selling firearms, gambling, illicit goods, etc.). Most standard businesses are fine, but check Cash App’s terms if you’re in a gray area industry.
Buyer/Seller protection: Cash App is similar to Venmo in that it is primarily designed for trusted payments. There is no formal buyer protection program for Cash App payments. Once a payment is sent, it’s generally irrevocable – Cash App does not typically mediate if, say, a customer claims they didn’t get what they paid for.

There is a risk of scams (for example, a scammer might send a fake “Cash App payment” email to a seller). Business accounts likely have to handle customer service on their own if a dispute arises. Cash App does flag and cancel payments it suspects are fraudulent, and users can request refunds from the recipient, but there’s no guarantee. So as a business, only use Cash App with customers or vendors you trust, or for smaller transactions where you’re comfortable with the risk level.
Use case: Cash App is very popular with younger demographics and in communities where mobile payments have overtaken cash. It’s common to see small independent businesses (hair stylists, food carts, artists) say they accept Cash App. It’s simple: often just a sign with “$Cashtag: $YourBusinessName.”

It’s best for domestic, small-to-medium transactions. Like Venmo, Cash App is U.S.-only (plus UK) – you can’t use it for international client payments. If your business is already using other Square products, Cash App could slot in nicely. If not, it’s still a handy standalone for quick payments. Just maintain good records externally, since the app’s interface is minimal.

Zelle for Business

Zelle is a P2P payment network different from the others in that it is bank-centric. Zelle is embedded in many U.S. banking apps (it was created by a consortium of banks) and moves money directly between bank accounts. When individuals use Zelle, they often do so through their bank’s mobile app or the Zelle app linked to their bank account. For businesses, Zelle can be used, but with some caveats:

Access via banks: To use Zelle for business, your bank must offer Zelle for business accounts. Many major banks (Bank of America, Chase, Wells Fargo, etc.) do support Zelle for small business checking accounts, but not all banks do. You typically enroll through your bank, using your business email or phone number as the Zelle recipient info.

If your bank doesn’t support Zelle for your type of business account, you won’t be able to receive via Zelle (some businesses get around this by using a personal account, but that could violate bank terms).
Fees: Zelle itself does not charge any fees – it’s essentially a service the banks provide. For consumers, almost all banks offer Zelle payments free of charge. For businesses, many banks also don’t charge fees (e.g., U.S. Bank offers Zelle free to business accounts).

Some banks might have limits on the number of transactions or charge for higher volumes, so it’s best to check your bank’s fee schedule. But generally, using Zelle is fee-free, which is a big plus – no percentage cut taken out. This is likely why Zelle is appealing to some businesses to save on credit card fees.
Speed and finality: Zelle transfers are fast – typically instant or within minutes, since they move money directly between bank accounts on the network. Once a payment is received in your bank account via Zelle, it’s real money (available immediately in most cases). However, Zelle payments are also generally irrevocable. There’s no escrow or dispute process.

Similar to handing over cash, if a customer sends you money via Zelle, they can’t “chargeback” through Zelle. (They could only try to scam by claiming fraud to their bank, but if it was an authorized payment, banks typically won’t pull it back without cause.)
Purchase protection: It’s crucial to note: Zelle offers no buyer or seller protection for purchases. In fact, Zelle’s website and banks explicitly warn users to only send to people they trust, and not to use Zelle for buying things from strangers online.

For a business, this means if you accept Zelle from a customer, make sure the customer is legitimate because they can’t easily get their money back (which some might see as an advantage, but also it means if they are unhappy, you have to resolve it directly). And conversely, if you use Zelle to pay a vendor, you can’t dispute the payment through Zelle if the vendor doesn’t deliver—again, treat it like cash.
Transaction limits: Zelle limits depend on the bank. For small business accounts, banks often set higher limits than for consumers. For example, Bank of America allows a small business to send up to $15,000 per day via Zelle. Chase might allow a different amount, say $5,000 per day, etc.

Receiving limits may also exist, but usually banks let you receive quite a bit. If using the standalone Zelle app (for those whose bank isn’t a partner), there’s a $500 per week send limit for consumers, but that app cannot be used with business accounts. Always check with your bank on your Zelle send and receive caps.
Using Zelle in practice: If you want to accept Zelle payments from customers, you would typically provide them either the email or phone number associated with your Zelle enrollment. There’s no username or handle – it’s tied to contact info. The customer then uses their banking app to send you money.

It’s a bit less convenient to “discover” a business on Zelle compared to scanning a QR code on Venmo, but it’s straightforward if both parties know it’s an option. Some businesses print a small sign “Zelle payments accepted: [email protected]”. This works well for services or repeat clients who prefer direct bank-to-bank transfers (e.g., a landlord collecting rent, or a freelancer invoicing a client can say “you can Zelle me at this address”).
Pros and cons for business: Pros: No fees, instant deposit to bank, no intermediary account to manage, no chargebacks. Cons: No discovery/social features (customers have to manually initiate to your email/number), no integrated accounting or invoicing tools (you’ll do that separately), and no protection if something goes awry.

Additionally, Zelle transactions are not automatically reported on 1099-K forms (because banks are not required to report them) – we’ll discuss the tax angle soon, but this could be seen as a convenience (less paperwork) or a risk (if one thought to misuse it to hide income, which is illegal).
Who uses Zelle: You often find slightly more traditional or older businesses using Zelle – for instance, a law office or a landlord might prefer Zelle for large payments, because it avoids credit card fees. It’s also used in some peer-to-peer sales (like people selling used items) instead of cash. For retailers or customer-facing sales, Zelle is less commonly advertised, but it’s growing.

One thing to note is Zelle is strictly U.S.-only (both sender and receiver need U.S. bank accounts). Also, unlike apps with stored balances, Zelle requires both parties to have a bank account. This means your customers who don’t use banks or don’t have Zelle won’t be able to pay you that way.

Other P2P Payment Options

Beyond the “big four” above, there are a few other peer-to-peer payment solutions businesses might encounter:

Apple Pay / Apple Cash: Apple’s Wallet app includes Apple Cash, which iPhone users can use to send money via iMessage. It’s seamless for personal use (like texting $20 to a friend). For businesses, Apple Cash isn’t widely used as a formal payment method, but some independent folks might accept it if both customers and businesses use iPhones.

Apple does not have a separate business cash app; however, Apple Pay (the broader service) can be used by businesses to accept credit/debit payments in-store or online. Apple Pay is more of a wallet than a P2P network – when a customer uses Apple Pay at your store, it’s actually processing a card payment (so standard merchant fees apply). In summary: Apple Cash (person-to-person) for small informal payments among Apple users; Apple Pay for real merchant transactions with proper processing.
Google Pay (GPay): Google Pay similarly has a feature to send money to peers (in the U.S., this works via the Google Pay app and is linked to bank accounts or debit cards). It’s not as popular as others, but it exists.

A business could request a Google Pay transfer to their phone number or email. However, Google has revamped its payment products multiple times, so usage is hit-or-miss. Most businesses would either use Google Pay in the context of accepting card payments (via Google Pay integration for tap-to-pay or online checkout) rather than expecting direct P2P transfers from customers.
Facebook Pay / Meta Pay: Facebook (Meta) allows users to send money to each other through Messenger, WhatsApp, or Instagram DM, using a linked card or account. For example, a customer could send a payment to a small business via a Messenger chat. Meta has branded this as Meta Pay.

It’s free for personal payments. Some small businesses on Facebook Marketplace or Instagram might use this for convenience. However, there is no special business account for Meta Pay; it’s more of a user convenience feature. It’s an option if you engage with customers on those platforms, but it lacks the business reporting that dedicated apps offer.
Others / Niche Platforms: There are other peer-to-peer payment systems globally (for instance, WeChat Pay and Alipay in China, Paytm in India, etc.), but for a U.S. business catering to U.S. customers, those are less relevant unless you have international clientele or tourist customers.

Western Union, traditionally known for money transfers, also offers online/app transfers which are peer-to-peer, though it’s more for sending money to family worldwide rather than point-of-sale. Cryptocurrency could be considered a form of peer-to-peer payment as well (Bitcoin, Ethereum sent directly to a business), offering no chargebacks and lower fees, but volatility and less mainstream adoption make it a separate category of its own, beyond our scope here.

In choosing a platform, consider where your customers are. If all your customers ask “Can I Venmo you?”, then having a Venmo business profile makes sense. If you invoice clients who prefer bank transfers, Zelle might fit. Many businesses adopt multiple P2P options to be flexible – just ensure you can keep track of them all for accounting.

Legal and Tax Compliance for P2P Business Payments

Using P2P payment platforms for business transactions introduces several legal, tax, and accounting considerations. It’s crucial for business owners to stay compliant with regulations and platform policies. Below we cover key points:

Terms of Service and Legal Use

As mentioned earlier, violation of a platform’s terms of service is a risk if you use it improperly for business. Each app has user agreements specifying how it may be used. For example:

Venmo: Personal profiles are only for peer (friend/family) payments. Venmo explicitly states you cannot use personal Venmo to receive business payments (i.e. payment for goods or services). If they catch it, they reserve the right to reverse the payment or ban the account. Venmo solved this by offering business profiles – which you should use if you’re selling something.
Cash App: Has a similar stance. Cash App personal accounts are for personal use; if you’re selling products/services, you should mark your account as business. If not, and if Cash App detects lots of incoming payments with indicators of sales, they might switch you or could suspend you. Also, using Cash App to transact in prohibited business types (like certain adult services, gambling, etc.) can get you banned.
PayPal: Their user agreement distinguishes personal payments (friends/family) vs. commercial. Using “friends and family” to evade fees on a sale is against policy. They can treat it as a violation leading to loss of seller protection or account issues. Always process sales as “goods and services” payments.
Zelle: Banks often say Zelle is intended for payments between people who know each other. However, many banks explicitly offer it for small business use now. Just ensure you accepted the bank’s small business Zelle terms (often found in the online banking agreement).

And do not use Zelle to receive payments if your bank’s terms forbid the type of transaction you’re doing (for instance, some banks might not want Zelle used for certain high-risk trades). In general, mainstream uses (client payments, retail sales) are fine if the feature is enabled for your account.

Tax Reporting (IRS Rules)

In the United States, businesses must report all their income to the IRS, regardless of how they received the payment (cash, check, card, or P2P app). P2P payments do not magically avoid taxes – they are simply another form of payment. However, what’s gotten a lot of attention is the IRS’s 1099-K reporting requirements for third-party payment platforms:

Form 1099-K is an IRS information form that payment processors use to report transactions. Historically (before 2022), a payment platform was required to send you a 1099-K only if you had over $20,000 in gross payments and over 200 transactions in a year. This threshold meant many casual sellers didn’t get a 1099-K.
In 2021, a law change (American Rescue Plan Act) aimed to lower the reporting threshold to $600 for any number of transactions. That caused a lot of concern that even very small hobby sellers would get tax forms.
The IRS delayed implementing the $600 threshold for 2022 and 2023. Instead, they set transitional thresholds: for 2023 (tax year 2024) a threshold of $5,000 was used. Then, in mid-2025, Congress passed a bill (sometimes nicknamed the “One Big Beautiful Bill”) that reverted the threshold back to the old standard for future years. As of now (late 2025), it appears:
- For 2024 payments, third-party networks were required to issue 1099-K if you received over $5,000 in business payments.
- For 2025 and beyond, the threshold is going back to >$20,000 and 200+ transactions (unless new legislation changes it again).
Regardless of these reporting thresholds, you are required to report your business income even if you don’t receive a 1099-K. The forms are just a compliance mechanism. If you evade reporting income because no form was issued, you’re committing tax fraud.
Which platforms report? PayPal, Venmo, Cash App, Stripe, and similar will issue 1099-K forms if you exceed the threshold with business transactions. They determine business transactions by whether payments are tagged as goods/services or sent to a business account. For example, if you have a Venmo Business profile or someone pays your personal Venmo and chooses “Goods and Services,” those amounts count.

Zelle, on the other hand, does not issue 1099-K forms, because Zelle is not considered a third-party payment network under IRS rules (it’s just a bank transfer facilitator). This means if you received $10,000 via Zelle for business, you won’t get a 1099-K from Zelle or your bank. But you must still report that $10k as income on your tax return.
Misclassification caution: The IRS is aware that personal transactions might accidentally get reported and business ones might try to hide. For instance, if you mis-mark a personal Venmo payment as “goods and services,” the payer could trigger a 1099-K to you unnecessarily. Conversely, some small businesses considered switching to Zelle to avoid the influx of 1099-Ks (“the Zelle tax loophole”).

However, not reporting income from Zelle is illegal tax evasion, and if audited, the IRS can uncover unreported income by examining bank records or other bookkeeping. In short: don’t rely on the platform’s reporting threshold to decide what income to tell the IRS. Report all your business earnings.
Record-keeping: Treat P2P payments like cash for record purposes. The IRS expects you to maintain supporting documentation for income and expenses. If you pay a deductible expense via a P2P app (say, you Venmo a contractor for design work), the Venmo transaction alone isn’t detailed; you should have an invoice or receipt from that contractor to substantiate the expense.

Similarly, if a customer pays you via Cash App, you might issue them a receipt and note the sale in your books. Good bookkeeping software or even spreadsheets can consolidate all your payment streams. Some accounting software can import data from PayPal, Square, etc., which might help.
Sales tax: If your business is required to collect sales tax on sales, P2P payments are not exempt. You’ll need to include those sales in your sales tax calculations and remit tax to the state just as you would for cash or card sales. The P2P app won’t automatically do that for you. Some platforms (like PayPal) do allow you to add sales tax to an invoice, but something like Venmo requires you to handle it manually.
1099 forms to contractors: Note that paying others through P2P also has reporting rules. If you use a P2P app to pay an independent contractor for services for your business, that doesn’t avoid the requirement that you issue them a Form 1099-NEC if you paid over $600. For example, if you use PayPal to pay a freelancer $800 for design work, you might assume PayPal will send them a 1099-K.

But PayPal will only do that if that freelancer’s cumulative goods/services payments exceed the threshold. The obligation is still on you (the business client) to issue a 1099-NEC to the contractor because it was a payment for services. However, if you paid through PayPal’s goods & services and the person does get a 1099-K, you typically would not also issue a 1099-NEC to avoid double reporting. Consult a tax professional in these scenarios.

Other Legal Considerations

Licensing and money transmitter laws: If you are just a business using P2P to get paid, you’re fine. But if your business model in any way involves moving money for others or acting like a payment service yourself, you’d trigger complex regulations. For example, don’t use your personal P2P accounts to collect money on behalf of other businesses or people (that could be seen as unlicensed money transmission). This is an uncommon scenario, but worth noting.
Privacy: Be mindful of customer data on P2P apps. Venmo’s social feed means payments might be semi-public by default. As a business, you can’t control a customer’s privacy settings, but you might remind them they can set transactions to private. Also, never request sensitive info over P2P (e.g., don’t ask a customer to put their email or phone in a Venmo payment note – that note is visible to their network by default).
Refunds and disputes: Have a policy for how you handle refunds if a customer pays via P2P. Since there’s no formal chargeback process in most cases, you’d need to manually send money back for a return, etc. Keep records of any refunds you issue through the app (to match them against sales).

Now that we’ve covered the serious compliance issues, let’s talk about how to keep your use of P2P apps secure and what limitations to be aware of.

Security, Risks, and Limitations of P2P Payments for Business

While P2P payment apps are convenient, businesses must approach them with caution regarding security and understand their limitations. Here are key risks and best practices:

Security Concerns and Fraud Risks

Security: P2P apps generally use strong encryption and security measures to protect transactions. They often offer features like multi-factor authentication (e.g., SMS code or biometric login). As a business, ensure you enable all available security features on your accounts. Use a strong, unique password and turn on two-factor authentication. Limit access to the app – if multiple employees handle payments, consider who has login credentials.

Fraud and Scams: Unfortunately, P2P apps are a target for fraudsters. Common scams include customers using stolen credit cards or bank accounts via a P2P app to pay you; the payment might show as “completed,” but days later it could be reversed if the app detects fraud or the card owner disputes it.

For example, PayPal and Venmo can reverse payments that are unauthorized (even if you withdrew the money already, you’d be liable to pay it back). Cash App and Zelle payments are more like cash – they generally don’t get reversed for fraud once in your account, but if someone hacked your account or phone, they could send money out.

To mitigate risks:

Only accept payments from people you are in contact with and are expecting payment from. Be wary of out-of-the-blue payments.
If selling goods via P2P, consider using platforms that have buyer/seller protection (like PayPal) for higher-value items, to deter scammers.
Educate yourself and staff on phishing scams. For instance, no P2P company will call you to ask for your login code or request you “return funds” as part of a fake overpayment scam. These social engineering tricks target small businesses too.
Keep your app and devices updated. Lost phones should be immediately secured (most apps allow you to revoke sessions; plus use phone passcodes).

Account freezes: P2P services may freeze accounts if they suspect suspicious activity or violation of terms. This can lock up your funds for a period. To avoid this, follow usage limits and avoid rapid, repetitive transactions that might look like fraud. Also verify your identity promptly when asked by the app, since not doing so can trigger freezes.

Lack of Buyer/Seller Protections

As noted earlier, unlike credit card processing or platforms like Etsy/Amazon, most P2P payments do not come with strong payment protections for either party:

No chargeback recourse for buyers through the platform (except PayPal). This means as a seller, you might think that’s good – but it also means customers may be more hesitant to pay you via these apps for expensive items because they have no safety net if you don’t deliver. You need to build trust in other ways.
Conversely, if a customer does pay and then claims fraud via their bank (for example, they funded a Zelle with their bank account and then tell the bank “I didn’t authorize this”), you could get into a dispute externally. Banks might or might not side with the customer after investigation. This scenario is rare for legitimate sales but can happen.

Best practice: Clearly communicate your sales policies to customers using P2P – perhaps send a confirmation email or receipt confirming what they purchased. That way they feel confident and you have some written record to prevent “I didn’t get it” claims. For high-value transactions, you might ultimately want to use invoice-based payments (PayPal invoice or a proper merchant account) to allow the customer a comfort of protection (and you as well, via proper channels).

Transaction Limits and Scalability

P2P platforms have various limits as discussed. This can be a limitation for businesses:

You might not be able to receive a single payment above a threshold (e.g., ~$5k on Venmo).
Daily/weekly caps on sending can affect how you pay others.
Some apps limit how much you can withdraw to your bank at once (like Cash App’s $25k/week to bank).

If your business frequently has transactions larger than these limits, P2P might not be the right tool for that purpose. For instance, selling a car for $15,000 – the buyer can’t just Venmo that in one go. They’d have to make multiple payments over multiple days, which is inconvenient.

Additionally, P2P apps typically are tied to single-user accounts (even business profiles are usually managed by one owner login). They aren’t multi-user systems. So if you have an accounting department or several employees handling payments, the coordination can get messy (who’s logged in, etc.). Traditional merchant services or point-of-sale systems handle multi-user scenarios better.

Scaling up: As your business grows, consider at what point you transition from peer payment apps to more formal payment solutions:

If you’re doing hundreds of transactions a day, manually reconciling Venmo or Cash App could be a headache. A proper POS might serve better.
High volume might also trigger more scrutiny from the apps (they could wonder if you’re running a large enterprise through a consumer app).
You may also get better processing rate deals by using a merchant account at high volumes, whereas P2P fees are flat percentages without volume discounts.

Other Limitations

No Integration: P2P apps usually don’t integrate directly with your other systems (aside from PayPal and Square which have some integration). For example, you can’t automatically feed Venmo sales into QuickBooks (except by manual steps or third-party services). This means more manual work.
Not Universally Used by All Customers: Despite popularity, not everyone uses every app. Some customers may only have one and not another. You might say “I accept Cash App and Venmo” and find a customer who only has Zelle or who doesn’t use any of them. Always have an alternative (like at least the ability to accept cash or card) for those who don’t use a particular app.
Funds not FDIC-insured: Money that sits in a P2P app’s balance might not be FDIC-insured (which protects bank deposits up to $250k). PayPal and Venmo balances are not FDIC insured unless you have certain settings (PayPal has a feature to put funds into a partner bank which then can be insured). It’s generally wise not to hold large sums in the app long-term. Transfer to your bank regularly to ensure money is safe and also so you have liquidity for expenses.
Customer Support Issues: Many users complain that getting help from P2P apps can be slow or difficult. If something goes wrong (say a payment is delayed or your account is frozen), you might not have a dedicated support line as you would with a merchant account. This can be frustrating and potentially disrupt business if you rely entirely on these apps. Keep emergency funds and don’t let your entire cash flow depend on one app functioning perfectly every day.

Despite these risks and limitations, thousands of businesses successfully use P2P payments daily. The key is to use them wisely and cautiously. The next section covers best practices to help you get the most benefit with the least trouble.

Best Practices for Businesses Using P2P Payment Apps

To safely and efficiently use P2P payments in your business, consider the following best practices:

Separate Business and Personal: Use dedicated business profiles or accounts on the P2P platform. This not only keeps you within terms of service but also makes accounting easier. Do not mix personal transactions with business ones on the same account – it complicates taxes and could expose personal funds to business liabilities.
Document Every Transaction: Even if the app is casual, treat each sale or purchase professionally. Send a receipt (even a simple email or text) to customers for their payment. Keep invoices from vendors you pay via P2P. This creates a paper trail beyond the app’s minimal info, helping with taxes and any disputes.
Transfer Funds Out Regularly: Don’t leave large balances sitting in the app. Schedule routine transfers (say, weekly or daily) to your business bank account. This limits your exposure if the app account is compromised or frozen. It also puts the money in your bank where it’s insured and easier to use for expenses like payroll or inventory (since most P2P balances are only spendable in-app or via their debit card).
Mind the Fees in Pricing: If you encourage customers to pay via a P2P app, remember to factor in the transaction fee to your cost of doing business. For example, if you sell a $50 item via Venmo Business, you’ll net about $49.05 after fees.

Make sure your profit margin accounts for that ~2% cut. Some businesses set a minimum purchase amount for P2P or offer a small discount for cash to offset fees – be careful though, as card network rules prohibit surcharging on one method vs another without proper disclosure. But generally, eating a 2-3% fee is part of doing business (and still often cheaper than a typical 3% credit card swipe plus monthly fees).
Inform and Educate Customers: If you’re accepting P2P payments, let customers know which apps you take and how to find you on them. For instance, display signage with logos (“We accept Venmo, Cash App, PayPal”) and your handle/QR code. Educate them on, say, selecting the “Goods and Services” option if using PayPal so that it’s a proper business transaction. The easier you make it, the more likely they’ll use it.
Use Security Features: We mentioned this in security – enable PIN codes, fingerprint/FaceID locks on the app if available. Some apps let you toggle that a payment requires confirmation – utilize those if it prevents accidental sends. Regularly review your account activity for any odd transactions.
Be Cautious with Unknown Payers: If a completely unexpected payment appears (sometimes scammers will send money, then claim it was a mistake and ask for a refund – later the original funding was fraudulent and you lose out), do not just refund via the same app without verifying. Ideally, refund by reversing the transaction through the app’s proper channels or have the app cancel it. Scammers rely on confusion. As a business, you might see more random payments if someone mistypes a username. Venmo has a feature for business profiles where payments from new customers can be held for your approval – consider using that if it helps manage who’s paying you.
Plan for Taxes: Keep a log of P2P income and set aside estimated taxes from that income. If you receive a lot via these apps, you may need to make quarterly estimated tax payments. Also collect sales tax as needed; an app making it easy to pay doesn’t remove your obligation to collect tax if applicable.
Know When to Move Up: If your business outgrows these apps, look into merchant accounts or services like Stripe, Square (beyond Cash App), or traditional credit card processing. They might offer better integration, stability, and support at scale. You can still keep P2P as an option for those who insist, but maybe channel most volume through more robust systems.

By following these practices, you can enjoy the speed and ease of P2P payments while minimizing headaches.

FAQs

Q1: Can I use apps like Venmo or Cash App for my small business?

A: Yes, but you should use their business-specific accounts or profiles. Venmo, Cash App, and PayPal all allow business usage if you register appropriately. Using a personal account for business transactions is not permitted and could result in reversals or bans. Always read the platform’s rules and switch to a business profile to stay compliant.

Q2: What fees do P2P payment platforms charge businesses?

A: Generally, around 2–3% per transaction. Venmo charges 1.9% + $0.10 per payment received on a business profile. Cash App charges about 2.75% for business transactions. PayPal’s fees are roughly 2.99% for standard business payments (or 3.49% + $0.49 if via online checkout).

Zelle is usually free for both parties (banks don’t typically charge for it). There are no monthly fees for these services in basic form; fees are taken per transaction. Note that instant transfer of funds to your bank (optional) will cost ~1.5%–1.75% on most apps.

Q3: Are there limits to how much I can send or receive using these apps for business?

A: Yes, each platform has limits:

Venmo: About $5,000 per transaction received on business profiles. Personal sending is limited (initially ~$300, up to ~$7,000/week if verified), but business profiles piggyback off that for outgoing payments.
Cash App: No cap on incoming payments for business accounts. Verified accounts can send up to $7,500/day and $25k/month.
PayPal: No fixed limits once your account is verified, effectively can handle large amounts (subject to fraud monitoring).
Zelle: Limits are set by your bank (e.g., $5k or $15k per day common for businesses). Receiving via Zelle usually has high or no caps, but check with your bank. Always verify current limits with the provider, as they can change or vary by user status.

Q4: How are P2P business payments reported for taxes? Will I get a 1099-K?

A: If you meet the IRS threshold, yes. Payment apps will issue you a Form 1099-K if your business transactions exceeded the required amount. For 2024, that threshold was $5,000. For 2025 onward it’s expected to revert to the old $20,000 & 200 transactions rule.

Regardless of forms, you must report all business income. Zelle is an exception – it does not issue 1099-Ks because it isn’t subject to that law. But income from Zelle or any source is still taxable, and you are responsible for declaring it. Keep good records of all P2P payments received and consult a tax professional if unsure.

Q5: Are P2P payment apps safe for businesses to use?

A: They are generally safe if used carefully. The apps themselves employ encryption and security measures. However, risks come from user error or fraud:

Transactions can’t easily be undone if a mistake or scam occurs – treat them like cash.
Use strong security (passwords, 2FA) to protect your account.
Only send/accept payments with people you trust or for legitimate transactions. There’s no escrow; if you send money to the wrong person or get scammed, recovery is difficult.
In summary, technologically they’re secure, but you must exercise caution to avoid fraud. For large sums or unfamiliar customers, you might want more protected methods (like credit card payments or escrow services).

Q6: What if a customer sends money to the wrong account or a wrong amount by accident?

A: If a customer mistakenly pays the wrong person (mis-typed your handle) on a P2P app, it can be hard to retrieve. Most apps do not automatically reverse such errors. The customer would have to rely on the wrong recipient to voluntarily refund it or contact the app’s support (which is not guaranteed to resolve it).

To avoid this, always double-check usernames, email, or phone number when instructing customers. Some apps have QR codes to minimize errors – using those is safer. If the wrong amount is sent (e.g., an extra digit making $1000 instead of $100), the approach is to have the sender request that you refund the excess.

As a reputable business, promptly initiate a refund for any overpayment. On platforms like PayPal, you can issue partial refunds through the interface. On Venmo/Cash App, you’d simply send money back for the difference. Good communication is key here.

Q7: Should I consider P2P apps as a replacement for traditional merchant credit card processing?

A: It depends on your business needs. For very small operations or side hustles, P2P apps can serve as a low-cost, easy solution. They save you from setting up merchant accounts and paying monthly fees. However, as you grow:

Traditional processing might offer better economies of scale and customer experience (not everyone has a P2P app, but everyone has a credit/debit card).
You get features like chargeback management, integrated inventory/POS, and possibly lower rates on large transactions.

Many businesses end up using a hybrid approach: P2P apps as an additional payment option or for specific scenarios (like events, small transactions, or peer-like dealings), while using regular card processing or online payment gateways for the bulk of sales. Offering more options can be convenient for customers, but ensure you can manage the complexity.

Q8: Will my customers need to pay any fees when using P2P to pay me?

A: Typically, no fee for customers to send money from their bank or debit through P2P. For example, Venmo doesn’t charge customers to pay a business (and even waives the usual 3% credit card fee if paying a business profile). Cash App doesn’t charge senders in general (except a 3% fee if a person sends money from a credit card to a personal account, which is avoidable by using a debit or bank).

With PayPal, if a customer pays you (business) via goods/services, they aren’t directly charged a fee; you pay the fee out of what you receive. So from the customer perspective, P2P is usually free and that’s part of the appeal. One exception: if a customer wants to use a credit card through a P2P app that’s not set up for business (like sending to a friend), the sender might incur a fee (e.g. 3%). But when properly using business profiles, the platforms shift fees to the business side.

Conclusion

Peer-to-peer payment platforms have undoubtedly changed the landscape of payments, making it easy for anyone – including businesses – to transfer money instantly with minimal friction. For U.S. businesses of all types, P2P apps like Venmo, PayPal, Cash App, and Zelle offer appealing benefits: quick access to funds, low setup cost, and customer convenience. Small businesses can particularly leverage these tools to simplify point-of-sale or remote payments without investing in complex infrastructure.

That said, P2P payments are not a one-size-fits-all solution for every business scenario. They come with limitations in protection, transaction size, and integration that mean they work best for supplementing traditional payment methods rather than fully replacing them. A balanced approach is recommended:

Use P2P payments for what they excel at: fast, small-dollar transactions, peer-like exchanges, and catering to the preferences of a mobile-savvy customer base.
Maintain good practices and compliance: keep business and personal transactions separate, record everything, and fulfill your tax obligations for P2P-derived income. Always abide by the platform’s business usage terms to avoid disruptions.
Mitigate risks: employ security features, be vigilant against fraud, and don’t rely on P2P for transactions where a more secure or traceable method is prudent (for example, very large sales or international transactions).
Monitor your growth: if you find P2P apps limiting or posing accounting challenges as you scale, consider transitioning to more robust payment systems. You can still offer P2P as an option, but your primary processing might shift to merchant accounts or invoices as volume increases.

In conclusion, P2P payments can be a powerful tool in your business toolkit. They lower barriers both for you and your customers, fitting well with the modern expectation for quick and easy payments.

By understanding each platform’s features, fees, and rules, and by following best practices for security and compliance, you can confidently integrate peer-to-peer payments into your business operations. Embrace the convenience, but do so with eyes open to the responsibilities and risks, and you’ll find that P2P payments can indeed “pay off” for your business in increased speed, customer satisfaction, and flexibility.