It’s Friday night and you’re out with friends in Downtown Miami. Everyone is enjoying themselves, dancing and having fun. It’s time to leave and one of the people you’re out with decides to pick up the tab and tells everyone to send them a payment whether it’s Venmo, Cashapp, or Zelle.
How often do you find yourself in a situation like this? Now a days it’s very common to send and request money from your friends via app. As normal as this has become it’s important to take a look at both the benefits and risk of using payment apps like these especially when your debit account is involved.
Benefits of Using Payment Apps
We can probably agree this is the major benefit of using payment apps and the reason why we use them. For example, say you and your friend do not use the same financial institution; transferring money from account to account is nearly impossible, so with payment apps like Venmo, Cashapp, or Zelle it makes that so much easier. And on top of that, let’s be honest who really even carries a lot of cash on hand anymore?
What happens when you need money transferred from one place to another and it’s in the middle of the night, on a Sunday or out of the country? The common thing about all of these scenarios is that most financial institutions will be unavailable to help make this transaction. However any payment app will be able to assist because users have 24/7 access to them and from anywhere in the world. Users even have the option to request or cash out and have the funds deposited or withdrawn from their accounts instantly.
Let’s go back to our example of enjoying the night with friends in Downtown Miami. Say you find yourself ready to pay back your friend, but you realize that you don’t have cash on hand, now you have to go find an ATM that may or may not be from your credit union or bank. Chances are it won’t, it will be some random one-off ATM in restaurant that charges a fee of anywhere from $3-$6. This may not bother some people, but most of us hate fees and that’s one thing that payment apps don’t require, is a fee to send or request money. The only fee normally associated with the apps are if you want the funds instantly and even then it’s usually only a fee of less than a dollar. Which would you choose?
Risks of Using Payment Apps
Increased Risk of Fraud & Security Issues
Along with the security issues that payment apps have, users also put themselves at an increased risk of fraud when using them. If someone gets hold of your login for your payment account app, they can easily start sending money to whoever without having to authorize themselves as many of these apps do not have multiple levels of authentication.
Reverse Payment Issues
One of the most common issues that users of payment apps face is retrieving money once it’s sent to a wrong person. Once funds are sent, it’s up to the user whether funds are returned or not. Many of the payment apps do not own the responsibility of funds and for this reason users have to be extra cautious when sending and receiving money.
No Call Centers
Getting in contact with payment apps can be very difficult as many of them do not have call centers yet. Most communication is sent via email, but can take very long periods of time in between communication and can be frustrating especially when an issue arises. If you’re trying to make a dispute, it can take some time and often not feel “worth” it at that point.
The use of payment apps like Venmo, Cashapp, and Zelle are becoming more and more common. If you’re a user of payment apps, try to be as cautious as you would with anything else as they too have benefits and risks. AND before you decide on pressing send, be sure it's not something your financial institution's mobile app can already help you with.