Smartphone sales might have plateaued in recent years, but it is a fairly safe bet that anyone who uses the ubiquitous computer in their pocket to run their lives has completed a financial transaction. It doesn’t matter whether you are using an iOS or Android device, it has become incredibly simple to both pay for goods or transfer money simply by engaging with a P2P payment application.
And while traditional banks give their customers the option to digitally send and receive money through a tool like Zelle, dedicated payment apps such as Venmo have become increasingly popular among end users. Around 60% of the U.S. population, according to CivicScience, use a digital payment platform on a regular basis, which underscores the need for end users to feel confident about its security measures.
The caveat to this digital convenience is that people should know that this transfer is not only safe but also going to the right person or company. Part of the appeal lies in the simplicity of an individual transaction, with people often able to just click on a QR-code to pay a bill or (more often than not) their friends.
With that in mind, let’s take a look at how you can use Venmo and Zelle safely for transactions.
What are Venmo and Zelle?
The average person is likely to be unaware that there is a marked difference between the two. P2P payments allow users to send or receive funds from an allocated bank account without disclosing the actual details — routing or account number, for example.
That makes a dedicated payment app such as Venmo — which is owned by PayPal — an attractive option for anyone with a decent smartphone. Zelle, by contrast, lives within the banking ecosystem and is designed to facilitate transfers between banks or credit unions in a matter of minutes.
If you are out for dinner with a friend and they pay for the entire meal, you can Venmo them. All you actually need is their email or phone number, but it does help if they have a Venmo account. When you open the app, a QR code will appear and the payer simply uses the camera phone to access the code to pay.
Zelle works within a bank’s app, which means that if you or someone you know has an account with a particular bank then it is very easy to transfer or receive funds between the two. It is worth noting that internal transfers can happen instantly, but moving funds between different financial institutions can take a couple of days — the clearing house system might still be predicated toward checks, but banks like to pretend that it takes time to process digital currency.
How safe are P2P payments?
So the $64 million dollar question is, how safe are Venmo and Zelle? The answer is that they are essentially as safe as you want them to be.
Much of that comes down to the fact that data encryption technology is part of the backend. Both are also able to take advantage of an extra layer of security — some smartphones offer biometrics, for example — but being cautious is never a bad thing.
NerdWallet, for instance, has some excellent words of wisdom. A recent blog post said that creating a pin that you use for digital transactions is a great place to start. Opting for notifications on every transaction is a must, as is making sure you enter ALL data carefully — entering the wrong email or phone number is not going to protect you from being liable for an unauthorized transaction.
According to Zelle’s dedicated webpage, there are three golden rules that you need to obey. These are simple: only send money to people you trust, beware of payment scams and treat Zelle as if it is cash. If this sounds like they should fall under the category of common sense, then you would be right.
Venmo’s advice is even simpler. Just make sure you pay the right person. The app uses QR codes to transfer money, so users need to ensure that they are sending digital cash to a person that is expecting to get paid — as the website sagely notes, “there are a lot of John Smiths out there.”
However, that hasn’t stopped some U.S. politicians from asking the Consumer Financial Protection Bureau to use its authority under the Electronic Fund Transfer Act to protect people from scams — for the record, Zelle does not currently offer a protection program for authorized payments.
At the end of the day, digital safety is only as secure as the apps we use and the ones we trust. P2P payments have become popular with smartphone users, but that doesn’t mean that people should just assume that the platform has your back. As long as we take the time to obey some basic rules, the chances of a transaction going wrong are significantly lessened.
With this knowledge in hand, you’ll be ready to embark on your next transaction with some peace of mind. To learn more about online security, check out our Total Defense Security blog how-to guides or contact us to speak with an expert.