Security Alerts

Payment apps like Venmo, Cash App, PayPal, and others are quick, convenient, and have changed how we shop online – or how we pay for a shared Friday night dinner with friends.

But with that convenience and advances in technology, there are also questions – is it safe to store bank information on your phone? Do these services have good cybersecurity? Will someone try to take advantage of you and steal your information or give you faulty goods?

Some of these questions don’t have the concrete answers we’d like, but they all boil down to one pressing issue: Are payment apps safe?

Ryan Baer, Information Security Manager with First Merchants Bank, answers that question.

Are Payment Apps Safe?

As with most tools, payment apps have benefits and risks associated with them and can result in issues if not used properly, with an eye towards safety.

“While these apps are an easy-to-use resource, there are many ways they can still be abused and can be used by individuals who will attempt to scam you out of money,” Ryan explained.

So – are payment apps safe? Well, a lot of that depends on how you use them.

How to Use Payment Apps Safely

Before you start shopping and sending money with one of these services, Ryan says there are a few things you should keep in mind:

• If it sounds too good to be true, it probably is – whether that’s a heavily discounted Kendra Scott necklace or a marketplace vendor offering to deliver furniture if you give them $50 in advance.
• These apps are designed to send money to friends and family. You should be extremely cautious when using them to make purchases online.
• Because of the nature of payment apps, it can be hard to recoup any funds lost – many services will deny claims if the transaction is determined to be a sale rather than peer-to-peer payment between friends and family.

Payment App Best Practices

There are also some best practices you can use to make sure you’re using the apps safely and responsibly.

• If you are buying a product, make sure you see it in person before sending any payment.
• Always verify the recipient before sending money – double check their phone number, username, and e-mail address to ensure it’s the correct person.
• Only send money to trusted individuals or businesses.
• Review your linked accounts and cards regularly, making sure to remove those that are old or no longer needed.

And, most important, Ryan said, is not to use these payment apps as if they were a bank.

“We absolutely do not recommend using these apps the same way you would a checking account,” he said. “We don’t recommend storing money on them at all. They typically do not have the same protections in place that banks do – they are not backed by the FDIC and other regulators. So, if the application fails or the parent company goes under, you could lose access to that money, or it could get tied up in company bankruptcy proceedings.”

Payment App Security

Overall, payment apps strive to provide strong security to their users, but there may be opt-in features that will strengthen existing measures that Ryan encourages folks to check out.

• If your payment app of choice offers account alerts for money sent or received, consider turning that feature on.
• Make sure the card or account linked to your payment app has account alerts or card controls enabled. This will alert you to unauthorized transactions more quickly, so you can take action.
• Update your password on payment apps regularly. Remember: Think of a password like a toothbrush – change it out for a new one regularly, and don’t share it with anyone.

Stay Up-to-Date on Current Scams

Unfortunately, the ease of modern technology increases your chances of running into a scammer. It may be sooner, it may be later, but it will happen. When it does, Ryan said it’s best to be prepared.

To do that, stay up-to-date on current scams – we post trends and recent scams in our Security Center – and familiarize yourself with scam tactics.

Common payment app scams include:

• Impersonation: Fraudsters posing as your bank, friend, or a business in an attempt to trick you into sending money
• Fake Purchase: Scammers may post fake listings and get you to pay ahead of time – then they will cut contact and remove the listing without sending you what was promised. Avoid paying for items or services from unknown sellers, transactions may not be protected.
• Accidental Deposits: Someone sends you money “by mistake” and then asks for it back – this can allow them to hack into your account or request back more than was sent. If this happens, contact your payment platform’s support team for next steps before you attempt to refund.

If you suspect you were scammed while using a peer-to-peer payment service, call your credit card companies and bank to place a hold on your account and contact the credit bureaus to freeze your credit. These steps will prevent anyone from using your name to open unauthorized accounts.

If you think you have been the victim of fraud, you can report it via the U.S. Department of Justice’s website.