In the last few years, cash payments have steadily been on the decline.1 Thanks to relatively new technology, mobile payment apps, it’s easier than ever to send or receive money electronically to and from friends, family, and coworkers from your smartphone. You don’t need to carry cash to pay someone and you can always pay the exact amount you owe, right to the penny.
What is a mobile payment app?
Mobile payment apps, also known as peer-to-peer payments (P2P), allow you to repay a friend for coffee, split utility bills with your roommate, or send your child lunch money anytime, anywhere. There are a number of apps and services available, but a few common apps include: Venmo, PayPal, and Zelle®. Once you have an account set up, you can send or receive your first payment in minutes.
Why use a mobile payment app?
Paying friends, family, and coworkers has never been more convenient when you don’t have cash on hand. Mobile payment apps make it quick and easy to send or receive money without the need to mail a check or stop by an ATM to make a withdrawal. These apps are intuitive to use, making them easy to set up and use anytime.
How do mobile payment apps work?
Once you select a mobile payment app, sign up to create your account. In most cases, you need your email address and phone number to create a unique username and password. Then, you need to decide if you want to link your bank account; this is optional, but necessary if you want to be able to transfer funds to/from your bank account. If you choose not to link your bank account, you can keep any money received in the mobile payment app for later use.
After you complete the initial set up, choose the recipient whom you want to send or request money from, enter the amount of the transaction, a short description/memo, and verify the recipient before submitting your payment. Depending on the app service, payment can be expected in a recipient’s account in a few hours or up to 3 business days. Some services allow you to store funds that can be used at a later time in the app itself.
Are mobile payment apps safe?
With increased convenience, it’s still important to consider the security of your accounts and information. There are several things you can do to reduce your risk of fraud or identity theft.
- Keep your apps up to date and don’t use “jail broken” devices (those that have been hacked to remove software restrictions).
- Always use unique passwords and don’t share them with anyone.
- Monitor your bank accounts with online and mobile banking, and report suspicious activity immediately to your bank or credit union.
- Set up app notifications to receive text and email alerts each time there’s a transaction.
- Avoid sending money to people you don’t know. If you need to send money to someone you don’t know, verify and confirm their information (username, phone number, or email address) before submitting payment.
- Use your smartphone’s security features, such as a PIN/password or fingerprint/facial recognition software to keep your device secure.
Thanks to mobile payment apps, splitting bills and paying friends, family, and coworkers has never been easier. Before you choose which service is best for you, do your research to find a secure and reliable service you feel comfortable with. As you use these services more often, you’ll become more accustomed to them and how they work – you might even wonder why you hadn’t used a mobile payment app sooner.