Treat Mobile Payment Apps Just Like Real Money

Mobile payment apps like Venmo, Cash App and Zelle^® make it easy to send money virtually between friends and family. Just download the app, set up a free account, connect it to your bank account or debit card, and voila! You can pay your babysitter, reimburse a friend for picking up groceries or chip in for a group birthday gift. You may even be able to use the app to make payments at some stores (but read on to learn why that’s risky).

One important fact to keep in mind: Just like the real thing, “cash” sent through a mobile payment app can’t easily be retrieved or refunded if you send it to the wrong person or don’t receive what you paid for. It may feel no different from using a credit card, but depending on the app, there may be no protection program if the payment is authorized by the user. Sending money through a mobile payment app is just like handing someone cash. Only use mobile payment apps to pay those you trust, and always double-check the email address, phone number or username to be 100 percent sure before you hit “send.”

The best rule to remember is, “If you wouldn’t hand this person a $100 bill, don’t send them money through a payment app.”

Why? Because you are liable for the loss if you lose that money to a con artist. Banks take responsibility for unauthorized transactions, which means they will generally cover losses from electronic funds transfers initiated by a third party who doesn’t have that authority and from which you receive no benefit. But consumers bear the responsibility for completed mobile app payments that they initiate.   

That easy feeling of not having to use paper money is why scammers love mobile payment apps so much. They want you to pay in a way that’s fast and makes it hard for you to get your money back. They’ll use charm, time pressure or fear to persuade you, perhaps using one of these Seven Common Scams. If you get an unexpected email, phone call or text asking you to send money, don’t click the links or send money before you double-check what they’re telling you through a separate source you trust. Even if you recognize the name of the person or company requesting the money, contact them first using a phone number you know is accurate. This extra step may save you the loss of your own funds, which can’t be easily retrieved after they’re in someone else’s possession. Learn more in our piece on How to Spot a Money Scam.

Social media makes it easy for people to market concert tickets or furniture for sale, but don’t pay with a mobile payment app until you have the goods in your possession. Mobile payment apps are not good pre-payment options with people you don’t know and trust. If you want to make a mobile payment, wait until you have the purchase in hand before you send the funds. 

Never give anyone the username and password for your mobile payment app or banking app for any reason, no matter what they say. Those credentials give them free reign to steal your money. No one other than you needs your username and password to complete a payment–not even your bank. Pinnacle will never ask for your access ID or passcode for Online Banking or a mobile payment app. Guard your credentials just as closely as you would your car or house keys. Take advantage of additional security features such as multi-factor authentication, PINs or biometric recognition.

If it is a legitimate debt you owe, there is always another way to pay. Be leery of anyone pressuring you to pay a “fee” or bill with gift cards, money orders or mobile payment apps. Apps should be reserved for trusted, person-to-person payments at the point of service.