Keep Yourself Safe from Scams
Peer-to-peer payment platforms like Venmo, Google, Wallet, Zelle, Apple Pay, PayPal, Cash App and others have made the process of sending money to friends, family, and even businesses fast and easy.
But that convenience may come at a price for users.
When using payment apps, fraud and scam risks are common, fees can increase usage costs, and the payment companies make money on the funds resting in consumer accounts – instead of the consumers themselves. There are, however, ways to use these apps safely and ensure you still make the most of your money.
Don’t Treat a Payment App like a Bank Account
Payment apps are not bank accounts. They do not allow you to earn interest on your money and they do not offer the same protections as an account with a financial institution. Banks are FDIC-insured, which protects consumer funds and provides peace of mind.
ACTION:
Minimize the amount of money in your payment apps. A good rule of thumb, if losing what’s in your app means you won’t be able to cover critical expenses, you should move your money immediately.
Payment Apps Offer Limited Consumer Protections
If you fall victim to fraud or accidentally send money to the wrong person, retrieving it can be difficult, if not impossible through these apps. Many do not provide the same level of buyer protection for your transactions as banks or credit card companies.
ACTION:
Make sure you track all transactions carefully and activate all available security options, like Multi-Factor Authentication and privacy settings, to ensure your account stays secure. Double-check all information before hitting the send button!
The Payment App Makes Money Instead of YOU
The average user has more than $316 sitting in their payment apps. That means the payment app is earning interest on your money instead of you. While some peer-to-peer apps offer automated ways to move your money to a bank account, most make it a manual process that users often forget to do.
ACTION:
Moving even a few hundred dollars a month from a payment app into an interest-bearing account has a positive impact on your savings. Limit the amount sitting in your payment app by reviewing the app on a regular basis and moving your money to an account that earns you interest.
Security Vulnerabilites
One of the biggest concerns with mobile payment services is security. Cybercriminals often target these platforms through phishing scams, account takeovers, and malware attacks. If your phone is lost or hacked, unauthorized users could gain access to your financial information and make fraudulent transactions.
ACTION:
Limit the amount of money sitting in your payment apps. Always look twice at any email or text claiming to be requesting or sending money to you. An extra 15 seconds to consider the source of a request can save you the headache of falling victim to fraud or scams.
While mobile payment apps are convenient, users should approach them with caution. Always enable two-factor authentication, double-check recipients before sending money, keep privacy settings updated, and have a bank account available to transfer any excess funds. Understanding the risks can help you make safer financial decisions and build solid savings habits.
