Payment apps have been around for a long time, but the use of them is growing exponentially in the United States. The most notable being Venmo, Cash App, and Zelle, all gaining popularity over the once dominant PayPal. While apps like Alipay and WeChat Pay are dominating the payment app space in China. PayPal was once the darling of the ePayment industry which garnered it’s reputation along with the rise of the internet. Famously co-founded by Tesla CEO, Elon Musk, PayPal’s rise eventually resulted in an acquisition by eCommerce giant, eBay. The online payment service was a perfect match for the world’s greatest online auction web application. PayPal was successfully launched as it’s own public company, reaching valuations of up to 100 billion. PayPal acquired Venmo as a part of the acquisition of Venmo’s parent company, Braintree. Zelle was the banking industry’s response to the payment app industry. Several of the major banks joined together to back the development of Zelle, touting banking industry support and security.

Security of financial data has always been an issue on the minds of users hesitant to move to a cell phone app rather than credit cards or PayPal. The convenience factor has to overcome the perceived security risks for a new user to jump aboard. Zelle’s advantage over all the other apps is a direct connection to bank accounts which can make the transfer of money happen instantly in comparison to several days of waiting on other apps, but this advantage could also be its biggest flaw. If you change your mind about a transaction, there is no way to reverse the funds. In the worst case scenario, once scammers get your money, there is no way you can reverse it.

Here’s how to be more careful when using peer to peer payment apps:

Fake Products:

Watch out for fake products. If you are using Zelle and you buy something on Craigslist which you later find out is a fake product after your funds have been sent, you can’t stop a fraudulent transaction via the app. The money is already gone. You might be able to call the bank and ask them to kindly refund your money to you, but it is their decision whether they want to send it back to you or not. You might have to take the loss if you didn’t do your research on the product before you bought a fake from a private seller.

Venmo Payment Cancellations:

When selling a product to someone you don’t know, it might be better to use cash instead of Venmo.  Venmo allows a 3 day transaction period where the money transfer can be cancelled.  So, someone could essentially take the product from you after they pay through Venmo and then cancel the payment when you’re out of sight.  Don’t risk it unless you know the person and you can track them down to get your item back.  Better yet, don’t do any electronic transactions with anyone you don’t trust.

Phishing Scams:

If someone gets access to your security information for your bank accounts, they could set up a Zelle or Venmo account on their own phone acting as you and draw your funds into another account. One way this is done is by calling you, pretending to be your bank, and asking for your security info such as passwords and answers to security questions. If you are suspicious about a call from your bank, request that you call them back at their official phone number to make sure you are really talking with the bank. Another way your security can be compromised is from fake bank websites. You might receive an email with a link to a website that is not your real bank’s website.  The website can then record the password and access information that you input into the site.

Confirm The Identity of the Person You Are Sending Money To:

Make sure you are sending to the correct person. If you are sending to Mike Smith, make sure that “MikeSmith714” is the right Mike Smith because it is likely for hundreds of Mike Smiths to be using the app. If you do end up sending money to the wrong person, you might never get a response back on the cash app which you sent the money through.

If you have any additional questions, please do not hesitate to write us in the comments below or send us a message.