What to Know About P2P Payment Services Before Buying Online

Peer-to-peer (P2P) payment services like Venmo, PayPal, and Zelle have become the go-to choice for many who make person-to-person purchases/sales via online platforms.  When buying or selling through Facebook Marketplace, Craigslist, OfferUp or similar marketplaces, using a P2P payment service is the most convenient option for many. 

However, P2P payment services are also an option that comes with risks.  When buying or selling through these platforms, you could do so more securely by using another payment processing solution.

The Risks of Using Peer-to-Peer Payment Services When Buying/Selling Online

There are two main risks of using peer-to-peer payment services, neither of which individuals always take into account.

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No protection for in-person transactions

First, these services generally don’t offer payment protections for in-person purchases that are made via funds transfer.

Many people have become accustomed to having payment protections when making purchases online.  Almost all credit cards offer protection via the option to file a dispute if there’s a problem, and PayPal and eBay made payment protection standard for purchases on the eBay marketplace.

Peer-to-peer marketplaces such as Facebook Marketplace, Craigslist, and OfferUp don’t have the protective measures in place that eBay and some others do, though.  You theoretically need fewer payment protections when you can see the item in person (and you always should). 

Potential for commercial red flag

Second, these transactions between individuals are technically e-commerce transactions (i.e., commercial transactions).  A good is being exchanged for monetary compensation, which is a commercial sale of said good.

The aforementioned peer-to-peer payment services generally don’t allow for commercial transactions on a personal account (which is what most people use).  While it might be unlikely, getting your account flagged for a commercial transaction can have serious consequences, including:

  • Withheld Funds. The funds paid could be temporarily withheld while the transaction was being checked (which can take days or weeks sometimes).  A seller wouldn’t be pleased if the funds aren’t immediately transferred, and this is obviously a potential problem if you’re the seller.
  • Blocked From Service. Your account could be suspended, or even permanently deactivated in certain cases, for conducting business on a personal-only account.  This is a risk even if you’re the buyer.

While the risk may seem small for a single transaction, it’s always possible.  The risk, of course, increases the more you buy/sell and the more valuable the items.  Even a single transaction that’s flagged could cause massive problems — especially if you’re dependent upon the service.

Payment Solutions for Marketplace Buying and Selling

In light of these risks, there are a few potential payment solutions for when you’re buying/selling on these platforms.

Good old-fashioned cash

This simplest solution is good old-fashioned cash.  Cash isn’t going to be held up by a payment processor, and it’s not going to get any account flagged for potential misuse.  It has downsides, like not providing buyer protection and potentially being stolen before the transaction, but has long been a preferred method for these types of sales.

Many people have become accustomed to having payment protections when making purchases online.  Consider cash if you’re getting something that can be fully checked out at the meet-up location (e.g., not a computer that requires extensive testing), and the item isn’t too valuable. 

When something is much more valuable, you can use a cashier’s check instead of actual cash.  A cashier’s check can be made out to a specific person, so it can’t be easily stolen by another party.  It’s obtained with cash, so sellers know that it’s good and will clear.

P2P payment services

If you’re only buying occasional items that don’t cost too much, you might actually consider using a peer-to-peer payment service.  This isn’t without the potential risk of being flagged, but you could use a service that’s only for these transactions.  It’s unlikely that your account will be flagged, you shouldn’t lose too much if it is and you can still use another one for other types of transactions.

Should you still choose to use a P2P service, Consumer Reports has found Apple Cash and Cash App more secure than either Venmo or Zelle.

Credit card processing

Using a credit card is the safest and most convenient way to pay for anything, including items purchased on marketplaces like these.  A credit card solves the aforementioned problems that P2P payment services present, and it does so more effectively than cash, a cashier’s check, or a less-used P2P service.  Credit card processing offers:

  • Protection. Credit cards offer buyers protection against bad items, as they can dispute charges in severe cases.  Sellers have the guarantee of funds being paid when the charge is authorized.
  • Commercial Use.  Credit cards can be used to pay for commercial transactions (and primarily are), and credit card processing services are specifically for commercial transactions.  With a credit card, there’s no risk of a transaction getting an account suspended or deactivated.
  • Theft.  The risk of theft is mostly unique to cash (and not P2P services), and it’s entirely eliminated with the use of a credit card.  Almost all credit card companies offer solid fraud protection should a credit card or number be stolen.

Credit cards are usually viewed as only for traditional purchases from a store or service, but the commercial nature of purchasing on these platforms likewise is what credit cards are for.  Additionally, solutions like Square have made credit cards more and more feasible. With easy setups and affordable fees, a small-business-focused credit card solution can certainly be used to buy and sell on marketplaces.

Be Safe

No matter how you pay for something sold on Facebook Marketplace, Craigslist, or OfferUp, be safe at all times.  Safe practices extend beyond merely the method of payment.  Make sure you’re following best practices like:

  • See the item in person before paying.
  • Bring someone along with you to the meetup.
  • Let someone else know where you’re going.
  • Have your phone with you, turned on and unlocked.
  • Verify and check sellers on sites like Spokeo whenever possible.

Before you next make an offer on a marketplace listing, consider how you should pay for it.  P2P payment processing is convenient, but a credit card or other form of payment could be better.  Whatever you decide, be safe, and good luck finding bargains.


Consumer Reports – CR Finds Potential Consumer Risks for Users of Apple Cash, Cash App, Venmo, and Zelle

Investopedia – E-commerce Defined: Types, History, and Examples

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