Sponsored: KEMBA Financial Credit Union
Technology and innovation are two things that drive our country’s evolution. When innovators see a need, they look for a solution. Peer-to-Peer (P2P) money apps were designed to solve the challenge of digitally transferring money from one person to another. Apps like Venmo, Zelle, Apple Pay, Google Pay, Samsung Pay, and the senior most of them all, PayPal, have created platforms designed to securely transfer money without cash or writing a check.
The P2P technology has come a long way since the origins of PayPal, but these advances also create risk for consumer fraud as tricksters begin studying these P2P platforms. The more you educate yourself on the risks of P2P money apps, the better prepared you’ll be to see a scam before it hits you.
Tips for Using P2P apps
1) Avoid sending money to unknown contacts
Recovering funds from a P2P transfer can be difficult, which is why using the apps to send money to strangers is discouraged. While the P2P apps do offer some support to users, they don’t have the resources or support that you would get from a credit card company. P2P companies see themselves as the vehicle for the transfer of money, not the arbiter of fraudulent transactions. After you hit the ‘SEND’ button, you may be on your own if you find yourself involved in a P2P scam.
It is also important that you double check the contact information for the person you are transferring money to, because a misspelled email address or a mistyped phone number may transfer your cash to another recipient. After the transfer goes through, recovering the funds may be difficult.
2) Be selective about P2P transactions
The purpose of the P2P apps is to provide a convenient way to transfer money to another person. Yet, in most cases, the P2P terms of service prohibit the use of using the app to pay for goods and services. Consumers have reported cases where the platform will reverse charges due to policy violations, which left the seller on the short end of the transaction. It is recommended to use P2P to send cash to friends and family, rather than using P2P to complete purchases online.
3) Research security options available for each P2P platform
Security measures are put in place to protect you while using P2P apps, so make sure you understand the options. From transactional security to account recovery options, it is important that you understand and activate security measures to keep your money safe.
Make sure that you keep your P2P apps updated as they release new versions. Scammers study versions of these apps to find vulnerabilities and updating your apps soon after a release is available will keep you a step ahead of them.
4) Choose your funding sources carefully
Since P2P is a digital transaction, the platforms are funded by digital sources – while traditionally linked directly to a checking account, in some cases debit cards and credit cards are also acceptable sources of payment. When selecting your funding source, always choose the option that provides the most protection. For example, your credit card company may provide more protection against fraud than a checking account, including fraud alerts and spend limits.
5) Understand the support terms for each platform
P2P apps are the vehicle for transferring cash, which means that after the cash is transferred, their involvement is completed. Familiarize yourself with the terms of service for each P2P platform to understand what levels of support they offer for transaction disputes or fund recovery and choose the platform that provides the best protection and support for your needs.
Monitor your banking partner’s stance on P2P
While some banks and credit unions have their own P2P apps, others may help their customers and members safeguard their accounts by not participating in select platforms. Find out how your provider helps protect you; for example, KEMBA allows members to create transaction alerts and is committed to monitoring fraudulent activity. It’s important to note, once you give your authorization or account information to a P2P app or site, your financial institution likely cannot stop or block the transfer of funds. While these apps are a fast, convenient way to transfer money, please be sure to keep these safety tips in mind.
If you would like more information about KEMBA membership and banking services, as well as card security and fraud protection, plus personal banking , business banking services or financial literacy resources , call a KEMBA Member Service Representative today at 800.282.6420 , option 4, to learn more.