Julie Jacob is a communications professional and writer who focuses on healthcare and technology issues.
Need to send or receive money? There’s an app for that
Fact checked by Shannon Sparks
Not too long ago, the only choices for paying someone were cash, check, or credit card. In recent years, however, another option has become available: peer-to-peer payment (P2P) apps. And they’re everywhere: for making purchases at farmers’ markets, tipping a hair stylist, paying for home improvement projects…the list goes on.
Zelle, Venmo, PayPal, Cash App, and Apple Cash are among the digital payment apps that empower consumers to instantly send or receive money from people and businesses with a few taps or clicks on their phone, tablet, or laptop.
Nearly half of people in the United States use P2P payment apps, with those listed above as the most popular platforms. Jackie Melinger, director of personal bookkeeping services at My Personal Bookkeeper in Deerfield, provided some insights on the advantages and disadvantages of using payment apps, as well as tips for sending money safely on these platforms.
Why P2P payment apps?
Convenience is the key reason consumers use P2P payment apps. Payments are instantaneous; there’s no need to swipe a card, write a check, or withdraw cash. Payment apps are also safer than writing a check, which can be stolen and altered to change the check amount or recipient’s name, Melinger says.
Which app is the best?
Each of the payment apps has its pros and cons. Melinger favors Venmo and Zelle because, she says, they are the most convenient to use.
Anne Wieboldt, personal money manager for the North Shore Senior Center, also likes Venmo. “I think Venmo is best for casual, quick transfers of less than $500 because the risk is limited, and they require you to indicate some information about what the transfer is going towards,” she says.
PayPal, which has been around for more than 20 years, is one of the oldest payment apps, but newer payment apps like Venmo (owned by PayPal) and Zelle seem to be eclipsing it in popularity, Melinger says.
Zelle, however, can only be accessed through the user’s bank account. Users must first log in to their online banking site before sending money through the app. Zelle also can be used only to send money between recipients with accounts at U.S. banks.
In addition, Zelle only allows users to send money from the user’s checking or savings account, while Cash App, Venmo, and PayPal enable users to link to a credit card or a checking account.
Send and receive money safely
No matter which app you use for sending money, make sure you keep aware of the latest security practices.
Treat payment app transactions like cash. Payments made through payment apps are sent instantly and cannot be recalled. Payments made on apps such as Venmo and PayPal provide some protection to challenge transactions when using a credit card, however.
Check and double-check the recipient’s email address and phone number. If a payment is sent to the wrong person, there’s no recourse unless the person who receives the payment by mistake does not accept it. Before sending a large payment to a recipient, confirm that the recipient’s email address or phone number is correct by sending a small amount first.
Never send money to someone you don’t know. Whether you receive a random phone call or email from an unknown person, or you’re sending money to someone who asks for help on social media, “be very careful,” Melinger says. “You should know the person you’re sending money to, and it should be something you initiate.”
Use strong passwords and multi-factor authentication. Strong passwords include a mix of upper- and lowercase letters, as well as numbers and punctuation marks. Each account should have its own unique password. Multi-factor authentication requires additional information, such as a verification code, to log in.
Check your privacy settings on the payment app. Some apps publicly display who you’ve paid and who pays you. In Venmo, for example, “if you don’t make your transactions private, everyone can see your payments,” Melinger says.
Check your bank statement carefully each month, as well as a summary of transactions made on payment apps. Even better, check weekly or daily to be extra cautious, so you will notice quickly if anything is amiss.
Use a credit card for major transactions. “I recommend using electronically generated bank checks or ACH transfers for important, high-dollar transactions. A credit card is also fine, but try to avoid any fees charged back to the consumer,” Wieboldt says. Payment apps are helpful when you don’t have cash, but for bigger charges or recurring charges, Melinger agrees: A credit card is best.
