These platforms facilitate the electronic transfer of funds between individuals, typically through a mobile application. Functioning as a digital alternative to cash or checks, they allow users to send and receive money directly from their bank accounts or stored balances. For example, a user can instantly reimburse a friend for dinner using their smartphone, avoiding the need for physical currency.
Their significance lies in providing convenient and rapid methods for settling debts, splitting expenses, and making small payments. Historically, such transactions required checks, money orders, or cash. These digital services streamline the process, often offering near-instantaneous transfers and reducing the friction associated with traditional payment methods. This efficiency has led to widespread adoption across various demographics.