What alternative methods of e-commerce transactions are available? ( P2P )

P2P or person to person payment services keep track of funds available to both the buyer and the seller. The buyer and seller (or service provider) both need to have accounts with the P2P service.

With P2P, if the buyer has deposited the appropriate funds at the person to person payment service then the transaction is approved and the purchase amount is deducted from the buyers account and added to the sellers account. In the P2P payment scenario the complete transaction can be processed internally making it unnecessary for the P2P company to access any external banking organization in order to complete the transaction.

The most popular P2P service is PayPal though there are others that are attempting to work up market acceptance. Public Acceptance of person to person payment services is the main drawback to using this type of service as your sole payment method. In order to purchase with P2P, the buyer is required to have a funded account with the P2P service. P2P competitors of PayPal are hard to find, most likely because PayPal is hard to beat, particularly in P2P market acceptance. If you are looking for a PayPal P2P alternative you might want to try Yahoo! PayDirect (though finding PayDirect information without signing up is difficult). PayPal has also been developing a 3rd party payer model. Click here for our 3rd party payer solutions page.

If the buyer is unable to obtain a credit card or doesn’t want to use credit cards online, or if the merchant is unable to qualify for a merchant account, person to person services are a good alternative. A merchant who currently has the ability to process credit card payments via a merchant account may even want to look into adding a P2P payment option in order to open their market to those customers who do not have credit cards available to them.

The primary benefits of P2P payment methods:

  1. P2P accounts are usually very easy to get.
  2. Purchase transaction approvals are typically straightforward (either the funds are available or they are not)
  3. Funding accounts and moving funds out of an account are usually fairly simple

The primary drawbacks of P2P payment methods are:

  1. Do not have universal public acceptance
  2. May give the purchaser less confidence in the seller (ease in obtaining a P2P account compared to a merchant account)


How do funds from my PayPal or other P2P service get deposited to my bank account?

Person to Person payment services typically allow 2 primary methods for receiving balances that are in your account with their service; check and electronic transfer.

PayPal for example allows you to request a check (with a minimal processing fee) or have the funds deposited directly to an existing bank account. For bank account transfers, the account holder needs to register their bank account information at PayPal. PayPal then sends a test transfer of a few pennies to assure that transfers can be processed into the account. When the account holder verifies that the test deposit was made into their banking account, requests for transfer of available funds can be made. Electronic transfers usually take about 2 days though PayPal allows 3 to 4 to account for holidays and weekends.

How do I fund a P2P service account?

Person to Person payment services have different methods allowed in order to fund an account. Depositing a check is most universal. PayPal also allows electronic funds transfer with a similar method as that listed above for withdrawing funds.

Merchant Account Alternatives

This page discusses Person to Person (P2P) transaction services (such as PayPal).

P2P additional notes:

Some purchasers do not want to use credit cards to make online purchases but they still want to take advantage of immediate purchases. Having a funded P2P account available is a good alternative for these people.

Do not assume that P2P purchasers are not able to qualify for credit cards.

P2P additional notes:

The Person to Person payment methods and services are actively evolving. PayPal, for example also allows credit card payments to be accepted into specific paypal accounts. As of this time, however, the purchaser still needs to sign up for a PayPal account even though they are paying via credit or debit card.


Understanding Merchant Accounts  >