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P2P Payment Platforms Can't Replace Credit Cards

P2P Payment Platforms Can't Replace Credit Cards

By Wednesday, 27 February 2019 05:53 PM Current | Bio | Archive

Mobile peer-to-peer (P2P) payment platforms have become quite popular in recent years. Apps like Venmo, Cash App, Zelle and PayPal offer users the convenience of being able to quickly and easily send and receive money from friends and family. Even apps like Snapchat and the iPhone messaging app allow users to send money now.

While these apps definitely have their place as a financial platform, they simply cannot offer many of the extraordinary benefits offered by credit cards.

If you’ve thought about ditching your credit cards in favor of one of these P2P payment platforms, take these factors into consideration before doing so.

Cash Rewards

Of course, one of the main reasons most people use credit cards in the first place is the incredible cash rewards offered by many of them. Cash rewards, airline miles, hotel rewards and other benefits allow consumers to save money simply by using their credit cards to make purchases.

While P2P platforms like Cash App have started to offer some rewards, they simply aren’t able to compete with the rewards offered by credit cards.

With the right credit card, consumers can rake in some serious rewards. Even credit cards that charge annual fees can be more than worth it, thanks to the savings generated by their rewards programs.

Until P2P platforms are able to start offering things like 5 percent cash back on revolving categories, access to airport lounges and free rental car insurance, they will not be able to replace credit cards.


In addition to the rewards listed above, credit cards offer consumers additional benefits and protections. From identity theft protection to purchase protection, credit cards can protect your financial stability in ways that P2P payment platforms just can’t.

Purchase protection is offered by several major credit cards. This feature insures purchased items against damage and theft for a limited time period. The coverage time and amount differs by credit card provider, of course, but this benefit can save you significant amounts of money on expensive purchases.

Price protection is essentially the same as the price match guarantee that commercial retailers often offer. If you purchase an item with your credit card and later find it for a lower price, your credit card provider may be able to refund you the difference in price. Citi Price Rewind, for example, covers up to $200 per item up to $1,000 per year.

Credit cards also often offer identity theft protection, which is much more secure than debit cards and P2P payment platforms. Credit card providers actively monitor customer accounts for evidence of fraudulent charges. If you or your provider notices a fraudulent charge, you can freeze your account and be sure that your credit card company will not hold you liable for the expense(s). Discover, for example, provides free fraud alerts to its customers.

P2P platforms, on the other hand, are notorious for having poor protections. If your account is temporarily compromised or you are the victim of a scam, good luck getting your money back.

As long as credit cards offer these protections and P2P platforms don’t, then P2P apps will not be a viable replacement for credit cards.

Building Your Credit Score

Your credit score is important. Having a poor credit score, or no credit score at all, could restrict you from renting an apartment, receiving a home mortgage or getting a good interest rate on an auto loan.

Credit cards are one of the most common and impactful methods of building your credit score. Paying off your credit card on time, establishing a long credit history and being a responsible spender can increase your credit score and establish you as a trustworthy individual to financial institutions.

Beyond that, most credit card providers grant their customers free access to their FICO credit score, which can help consumers prepare to take out a loan or rent a property.

P2P payment platforms do not affect your credit score at all. As maintaining good credit is vital, P2P platforms cannot replace credit cards in this respect.

Access to Money When You Need it

Lastly, the primary benefit offered by credit cards is the ability to access money when you need it.

For all intents and purposes, P2P payment platforms act as a barebones checking account. Users can deposit, receive and send money quickly with low or no fees. However, they cannot borrow money as they need it. For that simple reason, P2P payment apps cannot replace credit cards.

Credit cards and P2P payment platforms each serve an important purpose and offer customers certain advantages not offered by the other. However, if you have ever thought about dropping your credit cards and sticking to debit cards and P2P payment platforms, you should probably reconsider.

Joe Resendiz is a Research Analyst at ValuePenguin, where he focuses on personal finance and credit research to assist consumers. Previously, Joe specialized on public sector and infrastructure financing at Goldman Sachs. He graduated from the University of Texas at Austin with a BBA in Finance.

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Credit cards and P2P payment platforms each serve an important purpose and offer customers certain advantages not offered by the other. However, if you have ever thought about dropping your credit cards and sticking to debit cards and P2P payment platforms, you should probably reconsider.
p2p, payment, platforms, replace, credit, cards
Wednesday, 27 February 2019 05:53 PM
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