Does this scenario sound familiar?
You’ve planned a fun night in with friends. Someone is tasked with picking up takeout on the way over, meaning they get to front the tab. Everyone now owes their share but almost no one has cash.
So. How do you pay?
More and more often, that question is answered by a P2P (peer-to-peer) payment app like Venmo, Paypal, Zelle, or Cash.app.
But are these payment apps really safe?
While these P2P payment apps may be super convenient, they’re fairly susceptible to hacking, which means any payments you’ve collected could vanish into thin air, not to mention a potential identify thief could get their hands on the personal data you used in your profile (like credit card or bank account info).
So, should these payment apps be avoided altogether, or are there ways to use them that can help you be more secure?
As with most things financial, you must evaluate what level of risk you’re willing to take. Because P2P payment apps aren’t going away anytime soon, here are five best practices you can implement to make using payment apps a little less risky.
1 Don’t maintain a large balance inside payment apps.
Many users leave their funds sitting in their payment app accounts to use when they need to send money to someone else. But if you leave your balance in the app, you’re also leaving it with the least amount of protection. By transferring any balance to your bank account as soon as possible, you’re reducing the chance of it disappearing altogether.
2 Only send money to people you personally know.
If you’re trying to purchase something through an online platform like Craigslist or Facebook Marketplace and the seller requests payment through an online app, odds are it’s a scam. Venmo was designed as a payment app between friends and family, not among strangers.
So, don’t send money to people you don’t know personally and always be sure to double and triple-check that you’re sending money to the right username!
3 If you operate a business, don’t rely on a payment app to receive client payments.
Many personal service providers like hairdressers, massage therapists, or tarot readers like to use payment apps because of their convenience, but due to their lack of security, your best bet is to use a legitimate purchase processor.
While there are additional costs that can be associated with a merchant processing service such as Square, Clover, Stripe, they are just as convenient. Plus, they have a greater level of security built in, requiring a PIN or signature just like a typical credit card terminal and have to meet specific regulatory measures.
4 Enable two-factor authentication and any other available security measures.
Virtually all apps and major platforms offer some form of two-factor authentication these days. This can be as simple as requiring a PIN or using fingerprint recognition on your end. This may make it much more difficult for a would-be hacker to access your account, change the bank account you have set up to deposit funds into one of their own and make off with your balance.
5 Frequently check your associated bank account or credit card for charges you don’t recognize.
This is a good practice to use in general, but it especially holds true when using an online payment app. Check your bank and credit card statements frequently for any suspicious charges or any vendors that you don’t recognize, and be sure to report them immediately to your bank or credit card company.
THE BOTTOM LINE:
Although convenient, using a P2P (peer-to-peer) payment app such as Venmo and PayPal does not come without risk. But by using good security practices and a little common sense, you can decrease the chances of becoming a victim of fraud.