What is a P2P wallet and how does it work?

Sending money between people should be as simple as sending a message. Yet for years, traditional transfers have been weighed down by paperwork, delays, fees, and banking barriers.

P2P wallets exist to solve exactly that problem. They allow people to send and receive money directly, in digital form, quickly, and straight from their phone.

In this article, we explain what a P2P wallet is, how it works, and what you can do with it. Let’s get started.

What Is a P2P Wallet?

A P2P wallet (peer-to-peer or person-to-person) is a digital wallet that lets users send and receive money directly with one another, without complex banking processes or unnecessary intermediaries.

In simple terms: P2P = money moving from one person to another, using the wallet as the technological infrastructure.

In Latin America, this type of wallet has become especially relevant because:

• Many people do not have full access to a traditional bank account.
• Bank transfers can be slow or expensive.
• Informal payments, family support, and remittances are very common.

As a result, P2P wallets are now used both for everyday payments and for moving money across borders.

How Does a P2P Wallet Work Step by Step?

While each app has its own interface, the underlying logic is usually very similar.

1. Create your account in the app

You download the wallet on Android or iOS, register your user, and activate basic security measures such as a PIN or biometric authentication.

2. Add funds or connect a payment method

Depending on the wallet, you can:

• Link a bank account
• Use a debit or credit card
• Receive money from another person
• Use balances in digital dollars or crypto

3. Send money to another user

You only need a simple identifier for the recipient, such as:

• Phone number
• Email address
• Username

You then confirm the amount and the currency.

4. The recipient receives the money

The other person can:

• Keep the funds in their wallet
• Spend them
• Convert them to local currency
• Withdraw them to a bank account or cash, depending on availability

The entire process happens inside the app.

What Can You Do With a P2P Wallet?

The most common features of a P2P wallet include:

• Sending money to family or friends in seconds
• Receiving payments for gigs, small sales, or services
• Making top-ups, such as mobile balance or other services
• Paying online with a virtual card, if the wallet offers one
• Holding balances in USD or digital dollars
• Making international remittances with less friction than traditional systems

P2P Wallet vs. Traditional Bank Account

A clear way to understand what a P2P wallet is is to compare it with the traditional banking path. While they do not necessarily compete directly, they serve different roles.

P2P wallets stand out in person-to-person payments and everyday money movement, while banks focus on formal financial products such as loans, savings accounts, and long-term credit.

If what you want is to move money person to person in a simple way, a P2P wallet usually feels more direct. If you need formal banking products such as loans or certain types of deposits, a traditional bank account plays a different role.

P2P Wallets and Cryptocurrencies: What’s the Connection?

The relationship between P2P wallets and cryptocurrencies is not mandatory, but in many cases it is very present. Not all P2P wallets use crypto, but many modern P2P solutions rely on cryptocurrencies, especially stablecoins, to move money faster and more flexibly.

In practice, the term P2P is used in two different contexts:

• P2P payments inside a digital wallet: This is the most common and simplest use case. You send money directly to another person from the app using a phone number, email, or username. From the user’s perspective, it is just a transfer, without needing to understand the underlying technology.
• Crypto P2P marketplaces: This is a model where users buy and sell cryptocurrencies directly with one another. The platform acts as a trusted intermediary through an escrow system that releases funds only when both parties complete the transaction.

In these markets, stablecoins like USDT or USDC are commonly used because they represent “digital dollars” without the volatility typical of other cryptocurrencies. This makes transfers, remittances, and conversions to local currencies easier across different countries.

In short, P2P describes the way value is sent between people, while cryptocurrencies and stablecoins are often the infrastructure that makes those transfers fast, global, and fully digital.

Common Payment Methods in P2P Wallets

A P2P wallet is not defined only by its ability to send money between people, but by how easily you can move money in and out of the system. Being able to send payments is not very useful if topping up or withdrawing funds is slow, expensive, or limited by country.

That’s why one of the most important factors when evaluating a P2P wallet is the payment methods it supports. Depending on the app and the country, the most common options include:

• Local bank transfers
• Debit or credit cards
• Phone numbers used as aliases for sending and receiving money
• Cryptocurrencies or stablecoins
• Integrations with local payment rails

In practice, the difference between a good and a poor P2P wallet comes down to friction: how quickly you can add money, move it, and withdraw it when you need it.

Use of P2P Wallets in Latin America

A 2025 report by Coinchange indicates that 12.1 percent of Latin Americans, equivalent to 57.7 million people, already own digital assets. However, the use of P2P wallets in Latin America does not follow a single pattern.

In each country, these solutions grow in response to very specific needs, such as inflation, informal economies, remittances, remote work, or limitations in traditional banking systems.

Venezuela

In Venezuela, the use of P2P wallets has become a key tool for two main reasons:

• Moving money between people in a practical way, whether for everyday payments or family support, while avoiding slow or unreliable banking processes.
• Preserving value in digital dollars such as USDT or USDC to protect against inflation and the volatility of the bolívar.

In many cases, P2P wallets act as a bridge between digital dollars and local payment methods.

Discover the digital wallets available in Venezuela.

Colombia

In Colombia, the P2P use case is more functional and everyday-oriented. Wallets are mainly used for:

• Fast person-to-person transfers, often using a mobile phone number as the identifier.
• Managing Colombian pesos for daily payments, top-ups, and purchases.
• Receiving money from abroad, especially for freelancers or people who receive family support from other countries.

Here, P2P coexists with a mature fintech ecosystem, where speed, ease of use, and integration with local payment methods matter more than currency conversion.

Mexico

In Mexico, P2P wallets are becoming increasingly integrated into daily life, driven by:

• Payments between individuals and small merchants, where P2P competes directly with cash.
• Fast transfers without sharing complex banking details, using aliases such as phone numbers or QR codes.
• Receiving remittances and international payments, a highly relevant use case given the large volume of money entering the country from abroad.

At the same time, interest in digital dollars and stablecoins is beginning to grow as an alternative for storing value or receiving payments from other countries. This brings the P2P concept closer to the crypto ecosystem, without forcing users to deal with complex technical processes.

Popular P2P Platforms: What Options Are Available?

When people talk about P2P platforms, not all of them work the same way or are designed for the same type of user. In practice, there are two main P2P approaches today, and understanding the difference is key to avoiding confusion or mismatched expectations.

P2P “Payment” Wallets (Person to Person)

This is the most common and everyday use of the P2P concept. These are digital wallets designed to send and receive money directly between people, from a mobile phone and through simple flows.

This category includes wallets such as Kontigo, Nequi, DaviPlata, and similar apps, where users:

• Send money to known contacts.
• Operate entirely within an app, without manual negotiation.
• Use local methods like bank transfers or cards and, in some cases, digital dollars.

Kontigo, for example, fits into this category with a more global focus, enabling P2P transfers and USDC management under a self-custody model.

Crypto P2P Marketplaces (User-to-User Trading)

In this model, P2P does not mean sending money to a known contact. Instead, it refers to buying and selling cryptocurrencies directly with other users inside a specialized marketplace.

Platforms such as Binance P2P, OKX P2P, or Bybit P2P operate under this model. Users select an offer posted by another user, agree on the price and payment method, and complete the transaction within the platform.

To reduce fraud risk, these platforms usually rely on an escrow system. The cryptocurrencies are locked until both parties confirm that the payment has been completed successfully.

This model is common in the crypto ecosystem and typically uses stablecoins like USDT or USDC to represent digital dollars. However, the experience is more manual and requires greater attention from the user.

What Should You Look for Before Choosing a P2P Wallet?

Before downloading any app, it’s worth reviewing a few key points. This checklist helps you compare P2P wallets and avoid friction later on.

• Payment methods: Can you add and withdraw money using the methods you already use, such as a bank account, card, alias, or local transfer?
• Supported currencies: Does it support your local currency (bolívars, Colombian pesos, Mexican pesos, and so on) as well as USD or digital dollars if you need them?
• Fees and hidden costs: Does it charge for top-ups, withdrawals, currency conversion, or transfers? Are fees high, or are they clearly disclosed upfront?
  User experience Is the process truly simple, or does it require manual steps, external confirmations, or coordination with other users?
• Support and customer service: If something goes wrong, is there a real support channel, or do you depend on forums and automated replies?
• Security: What mechanisms are in place to protect your funds and access, such as biometrics, encryption, self-custody, MPC, alerts, or similar features?

Platforms like Kontigo bring all these criteria together: flexible payment methods, support for local currencies and USD, a simple experience, active support, and advanced security through MPC. This allows you to move your money quickly and safely.

Kontigo: Your Secure and Easy-to-Use P2P Wallet

Kontigo offers a P2P wallet designed to combine a simple experience with full user control:

• It links directly to your bank account, automating top-ups and debits and avoiding the manual steps typical of traditional P2P models.
• It is a self-custody wallet. You keep control of your funds and keys, reinforced through MPC (Multi-Party Computation).
• It allows you to send remittances to countries like Venezuela and make free transfers between Kontigo accounts.

With Kontigo, your money moves fast, securely, and always under your control.

Download the app on IOS or Android and start using a digital wallet with no unnecessary complications.

Frequently Asked Questions About P2P Wallets

Is a P2P wallet the same as a bank?

No. A P2P wallet is a digital tool focused on sending and receiving money directly between people. A bank offers additional products, such as loans or deposit accounts, and operates under a different regulatory structure. For example, Kontigo makes it clear that it is not a bank, but it allows users to move money securely and efficiently.

Do I need a bank account to use a P2P wallet?

It depends on the platform. Some wallets link to bank accounts, others work with internal balances, and some use stablecoins or digital payment rails. What matters is that you can add and withdraw funds in a way that fits your needs.

What does “P2P” mean on Binance?

On Binance P2P, “P2P” refers to a marketplace where users buy and sell cryptocurrencies directly with one another. The platform acts as a trusted intermediary through an escrow system that protects funds until the transaction is completed.

Is it worth using a P2P wallet today?

If you want to move money between people quickly, conveniently, and from your phone, a P2P wallet is one of the most efficient options, especially for everyday payments, small transfers, and remittances. Before choosing one, check which top-up and withdrawal methods it supports, the currencies it handles, its fees, security features, and customer support.