How to Use Venmo, PayPal and Other Payment Apps More Wisely | Personal Finance

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When it comes to paying family and friends, people overwhelmingly prefer to use cash apps, according to a survey of 1,000 Americans by SMS marketing platform SimpleTexting. Six in 10 people prefer to use apps compared to only 8% who like to make these payments with cash. Bank and wire transfers and checks were also significantly less popular options.

PayPal, Venmo and Google Pay are among today’s popular payment apps. Regardless of which one you use, be sure to follow these 11 tips to keep your money safe, avoid scams and minimize fees.

  • Use a strong password.
  • Set up two-factor authentication.
  • Understand payment dispute policies.
  • Link a credit, not debit, card.
  • Minimize your account balance.
  • Keep your payments private.
  • Limit personal information in the app.
  • Reduce your payment fees.
  • Pay online retailers confidently.
  • Avoid payment app scams.
  • Review privacy policies.

Use a Strong Password

As with any digital account, cash app passwords should be strong and contain a mix of letters, numbers and symbols. Avoid using words that can be easily guessed and be sure to use a unique password for every account. Also, it should go without saying, but don’t share your passwords with others.

Set Up Two-Factor Authentication

When available, turn on two-factor authentication in your account settings. This security measure sends a code via email or text which must be entered before you can log in or send money. “It makes it a little more difficult for perpetrators to access your account,” says Marcell King, chief innovation officer for Payveris, a digital payments platform.

Understand Payment Dispute Policies

Not all payment apps operate the same way, and people should understand if and how an app will help out if there is a problem with a payment or if a seller does not deliver a purchase as promised.

PayPal has excellent dispute resolution policies, says Louis Hoch, CEO of Usio, a payment processing company. However, apps such as Venmo and Zelle are meant to be used only within your trusted network of friends and don’t have the same type of protections. “Once you push a button on Zelle and send the money, there is no way to get it back,” Hoch says.

Link a Credit Card

Within cash apps, users can link bank accounts, credit cards and debit cards to transfer money and make payments. “If you do register a card, I recommend a credit card, not a debit card,” King says.

Should someone gain access to your account and make payments using a debit card, your bank account could be out of the money while the payments are investigated. Credit cards protect against the possibility of this scenario.

Minimize Your Account Balance

Cash apps may allow you to keep a balance, but it isn’t necessary to do so. “It does not benefit you at all,” Hoch says. “You’re not earning interest.” If you do decide to keep a balance for budgetary or other purposes, limit the amount so you don’t risk losing a large sum should someone gain access to your account fraudulently.

Keep Your Payments Private

Venmo has a social network aspect to it that allows users to make transactions public. However, even if you think you’ve limited your payment details to friends, more people than expected may be able to view that information.

“Even when your account is set to ‘friends,’ that means friends of friends can see your exchanges,” says Rachel Vrabec, founder of The Kanary, a digital privacy service. She suggests making an account private instead. “Payment information can seem harmless, but it never hurts to have an extra layer of privacy around who you’re sending money to and receiving money from.”

Limit Personal Information in the App

People should avoid giving payment apps any more information than is necessary. For instance, a photo is optional on many cash apps as is a phone number. If you plan to use the “friends” setting on Venmo, consider using an alias for your name, Vrabec suggests.

“Since PayPal is a big target for hackers and has been breached in the past, consider setting up an alias email address (to register your account) that forwards information to your primary email,” Vrabec says. That way, should your account be compromised, fraudsters would not have access to your primary email address which may be connected to other websites and services.

Reduce Your Payment Fees

It’s relatively easy to avoid fees on many platforms. Most cash apps don’t charge a fee for sending money to another person using an account balance, bank transfer or debit card.

Using a credit card to transfer cash could incur a fee though. Not only might the app charge a fee, but a credit card company might view the transfer as a cash advance. Then, the issuer could assess its own fee as well as a higher interest rate for these transactions.

“Both PayPal and Venmo will try to get you to pay them in order to receive your funds faster,” Vrabec says. However, if you don’t need an expedited transfer, sending money to and from your bank account is typically free.

Pay Online Retailers Confidently

While PayPal started as a way to easily send money from person to person, it is now a payment option on numerous websites. “It’s probably one of the safest mechanisms to do purchases on the internet other than a one-time (use) card,” Hoch says.

Using a credit card via PayPal to make a merchant payment doesn’t come with any extra fees, and there is an added bonus. “It reduces the number of sites (where) you’re storing your card information,” King says.

Avoid Payment App Scams

Scammers target payment apps like PayPal and Venmo in various ways. They may send phishing emails that make it look like an account has been locked or a large purchase was made. If you are concerned about the status of your account, open the app from your phone or type in the website address in a new tab to log in and check the legitimacy of the message. “Do not click on random emails,” King says.

Another common scam involves people using stolen credit card numbers to send Venmo payments at random. Then, they contact the person who received the payment to say it was sent in error and request that it be returned. However, before doing that, Hoch recommends contacting Venmo to confirm the initial transaction was valid.

“If someone requests money from you who you don’t know and continues to do that, block them,” Vrabec says.

Review Privacy Policies

Before using a payment app or service, take time to look at the company’s privacy policy. In addition to seeing what data the service is collecting and sharing, double-check the permissions its app requires. If you aren’t comfortable with one company’s policy or permissions, you may be better served by using a different cash app.



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