Money Messenger: Discover says its P2P is free, but is it?

By , CardRatings contributor
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While credit cards make it easy to pay for purchases and utility bills, the convenience pretty much stops there unless your babysitter takes plastic or your Mom can run a credit card in her kitchen. Which is why Discover Financial Services has gotten into the person-to-person (P2P) game with its new Money Messenger service, "powered by PayPal," the leader in the P2P industry.

How it works

Money Messenger gives Discover cardholders the opportunity to send money to anyone who has an e-mail address or cell phone number; Discover claims recipients don't need a PayPal account for you to send them money…but they will need one to claim that money. So basically, a PayPal account is needed for the recipient, but not the sender.

While other credit cards offer similar P2P services, Discover is the only one using PayPal for its transactions. Right now, it's the only one not charging any fees for sending money. The funds will come from your Discover account with no fee, according to the company's website. According to Discover, you'll accrue cash back rewards because the fund transfer will be applied to your account like any other transaction.

Sweet! You make money for sending money, right? Or do you?

The scoop on transaction fees

A number of credit card discussion forums are buzzing about whether or not PayPal is charging a fee for Money Messenger transactions, and if so, who pays it? The sender or the receiver? According to PayPal, "When you use a credit or debit card, the cost is 2.9 percent of the total amount sent plus $0.30 USD per transaction. When you log in, you choose whether you or the recipient covers this cost." So while Discover may not charge a fee for sending the money, there still could be one applied via PayPal, which could wipe out any cash back rewards you might accrue.

The other thing to note is that at least for now, not all Discover card holders are eligible to use Money Messenger. The site isn't giving specific criteria about who is eligible, just advising card holders to apply, and if you get turned down, try again later.

If you want to keep track of all your financial transactions in one monthly statement, a service like Money Messenger could be for you. But like most things that sound too good to be true, it pays to read the fine print.


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