squareThe P2P (person to person payment) heavyweight currently is PayPal.   But it has some contenders who are aiming for a piece of that increasingly lucrative market. Among the most promising:  Square Cash.   A close second: Apple Pay, Google Wallet and Amazon Payment.   Others include Dwolla, Simple, Venmo and GoBank.    And increasingly, most online banks are offering free transfers.  The biggest winner:  the consumer, as cash transfers and business payments get more affordable….or free!  The wonderful development is that online payments are getting simpler and cheaper.  The not-as-wonderful part is that choosing among the options is complicated.   Your ultimate choice may depend upon the size and frequency of the payments you will make, how quickly they need to be transferred and your financial relationship with the receipient.

Square is one of the larger companies that you’ve used but never heard of.   It is a  heavyweight in the e-merchant space with its free iPad, iPhone and Android card readers, as well as its cheap merchant fees.  It has recently unveiled a new service called Square Cash.    It has entirely vanquished transfer fees for debit card accounts.   The service is completely free and remarkably easy to use.     More importantly, it could be an invaluable tool for e-commerce entrepreneurs as they now have a low-cost (or free) alternative to PayPal.

You want cash payments or transfers to be simple?  Here’s how Square Cash makes simple happen.  First, you need to create a Square personal account and assign a debit card.   After that, you either can manually draft an email message to the recipient with the dollar amount in the subject line (at least $1) and copy cash@square.com, or  use the Square Cash mobile app to create the email attachment for you.  The transfer is completed via your email to the recipient.    What you don’t see is that Square is charging the transferred amount to your debit card and simultaneously crediting the same amount to the payee’s card.   It is as if you swiped your debit card at a checkout stand. Most importantly, the transfer is free to both the user and payee, so long as you are using debit card accounts.

An important aspect of Square Cash transactions is that they can be canceled and disputed.   In the event that you don’t receive the service or product that you purchased or are, for some reason, unsatisfied then you appear to have recourse.  At the Square Cash website, you can elect to cancel a Square Cash transaction if it hasn’t been redeemed, with a refund to your account within 14 days.  It also offers a process by which you can dispute a transaction.   The biggest drawbacks with Square Cash are the $250 per week limit and the email-only customer service.

In September 2014,  Apple announced the introduction of its “Pay” service.   It coordinated with financial giants Citigroup and American Express, as well as merchants such as McDonald’s, to offer a digital payment system. Instead of working with PayPal on the development of its payments system, Apple struck a deal with start-up Stripe. To make a payment, a person swipes an iPhone at the checkout counter and confirms the transaction by using the fingerprint scanner on their iPhone.

Google Wallet offers something similar, but not as simple or affordable.   Google charges a 2.9% transaction fee for debit and credit card transactions  (Square doesn’t offer credit card transfers) and its process is a bit more burdensome although its integration into Gmail makes things simpler once you’ve signed up.   You need to create a Gmail account as well as a Wallet account.   In the attachment options of the compose page in Gmail, click the money sign and select which linked funds you’d like to send money from. If the recipient is already a Gmail and Google Wallet user, then the money will be deposited into his or her Google Wallet account once the transfer is accepted on the other end of the email. If not, the recipient will have to sign up for a Google Wallet account to receive your payment.

Amazon Payments offers a very affordable option (in many cases, free)   and is a most attractive option for Amazon customers (and merchants).   Amazon allows consumers to send money for free with a verified bank account, credit or debit card.   This allows you to make payments to earn credit card points or to reach minimum credit card spending requirements. Like the other peer-to-peer payment services,  both the sender and recipient need to have an account with Amazon.    The competitive advantage offered by Amazon is that it can afford to offer a no-fee option to make payments because it benefits its sellers and enterprise clients.   So it makes the Amazon purchase proposition far more attractive to both buyer and seller.  Expect Amazon to continue to expand and refine this functionality.

Dwolla requires that that those receiving money register for a Dwolla account to accept the money. Transfers under $10 are free, with anything over that mark pegged at $0.25.  So the low rates are very attractive, but funds must be pulled from your bank account.    Venmo is popular among the college-age and young adult demographics and is limited to mobile transactions.   Spoiler Alert:  it was recently bought by  PayPal.  Payments from your bank account, Venmo balance, and most debit cards (presumably from larger banks) are free. Payments from credit cards cost 3% of the transaction total.  Users have the option of attaching a tweet-length comment or message along with it. They can then watch the messages of their Venmo-using friends flow by on a Twitter-esque feed.    It is mobile-only and designed to use in social networks — these are positives for some customers but negatives to others,  especially those who prefer to do payments on their desktop computers and are concerned about privacy.

Square Cash may be the most promising money transfer proposition right now  because it allows consumers and e-commerce entrepreneurs to transact business at literally no cost……at least, for now.   There’s no guarantee that Square will continue to offer this free service.   But you can be sure that PayPal, Apple Pay and Google Wallet  (along with Amazon’s payment service) is taking note of this audacious entry into online cash transactions.    More options are expected to develop and things will likely get more confusing in the short-term as they various P2P contenders jockey for position in this marketplace.