Leave it to millennials to popularize a new way to split a bar tab. Person-to-person mobile payment services like Venmo, Snapcash and Cashtags are bypassing ATMs and those awkward moments when the check is delivered after dessert. Instead of splitting costs on multiple cards, these mobile payment services allow users to instantly send money from one personal bank account to another.
And that’s not all their splitting. Alexander Culberson spent $1,300 on gas, hotels rooms, food and drinks with four friends on a tip to Maine. Instead of slitting up individual items throughout the trip, the group of friends decided to split the final bill with PayPal-owned Venmo, an app the works similarly to a text message.
“If you say ‘I’ll grab beer and you grab the groceries,’” said Culbertson, “things usually don’t come out as planned.”
Twentysomethings are finding ways to make everything simpler with mobile. Dan Callahan, a 22 year-old marketing manager says he uses the service to collect rent money from his roommate.
“I write the checks or pay online for our rent, utilities, and anything else, and at the end of each month, I total it all up and he sends me half,” Callahan said.
Peer-to-peer mobile payment services are on the rise: Venmo, for example, experienced four times the growth this quarter compared to last year. What’s more, of $2.4 billion in processed transaction last year, $1.3 billion where in the last four months.
This is a drop in the bucket compared to total online spending predicted to reach $334 billion in 2015. Companies like Apple, Facebook and Samsung have already caught on to these trends and quickly launched digital wallets that function similar to popular mobile payment apps.
But is it safe to transfer money through a mobile app? Security doesn’t seem to be an issue—yet. Most of these payment services work similar to other apps that link to a user’s bank account. This means card information might be accessible if a phone is lost or stolen, but most new-age users (who are often never without their phones) find that convenience outweighs any apparent risks.
Sierra Davis from Los Angeles said, “For my generation, money transfers like this are so familiar that it feels safe.”
For now the systems work best for people on the same platform. Most are free or have low associated fees. Eventually there may be opportunities to pay for everyday items with friends including pizza and pay-per-view.
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