What's the safest way to send money? Personal checks or cash used to be the best way to limit risk, but according to research from PWC, tech savvy-millennials are now driving "customer-centric business models" for alternative payment systems that deliver both speed and security.1

Traditional banks are the ones playing catch-up in this market: online services and apps such as PayPal, Venmo and Zelle now offer easy ways to transfer money online. The catch? Transferring money online can also increase risk. Here's a look at how users can protect themselves (and their accounts) from online payment scams.

online money apps

Online apps streamline payments

The biggest name in online payments? PayPal. With over 220 million accounts worldwide, PayPal is the service to beat.2 The model is simple: users create an account and can send money to any other PayPal user, pay for items online or transfer money to their bank account.

Another option is Venmo, created by PayPal but with a different customer focus—millennials.3 After creating an account, users can easily send or request money with the recipient's email address or phone number, and the mobile app provides a kind of social media "feed" showing transactions and payments. The app is often used to split food bills, pay rent and transfer money between friends. Worth noting? The transaction can't be canceled once completed.

One up-and-coming service is Zelle, which is an effort by big banks to tap into the online transfer market.4 Banking customers with active accounts at participating financial institutions can create an account, and Zelle comes built-in to most bank apps. By focusing on the transfer of money between U.S. bank accounts, traditional banking providers are hoping to grab the attention of their older demographic. Since these accounts are already verified by financial institutions, money transfers take minutes rather than days.

online safe money

Staying secure

It's critical for users to play an active role in keeping their money safe by knowing the signs of potential account compromise:

  • Transfer without permission: Even in small amounts, no money should enter or leave accounts without the express permission of users.
  • Odd requests: Watch out for email transfer requests or "warnings" from PayPal or Venmo that your accounts have been compromised and users must "act now." Never click on links in an email directly. Instead, go to the site itself or use the mobile app.
  • Changed settings: Users should regularly review their privacy settings to ensure that they're fully protected. In the case of Venmo or Zelle, this means ensuring phone numbers aren't publicly displayed and limiting who can see transactions in social media feeds.

online money bank

Keep your money safe

Security measures such as two-factor authentication, which sends a one-time code to mobile devices for account access, are very useful for transferring money online. Users should also log out of apps and accounts after each transfer.

Online payments can be the safest way to send money, so long as users recognize potential risks and take steps to actively secure their accounts.

Resources:

1. "Emerging Markets: Driving the Payments Transformation." PwC. Accessed March 29, 2018. https://www.pwc.com/gx/en/industries/financial-services/publications/emerging-markets-driving-payments.html

2."PayPal: Active Registered Accounts 2017 | Statistic." Statista. Accessed March 29, 2018. https://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-2010/.

3. "What Is Venmo?" Venmo. Accessed March 29, 2018. https://help.venmo.com/hc/en-us/articles/221011388-What-is-Venmo-

4. "Frequently Asked Questions." What Is Zelle? Accessed March 29, 2018. https://www.zellepay.com/support/what-is-zelle

5. Steiner, David. "Beware the PayPal Money Request Scam." [!SiteTitle]. Accessed March 29, 2018. https://www.ecommercebytes.com/C/abblog/blog.pl?/pl/2018/3/1521593116.html

6. Jolly, Jennifer. "Venmo Scams: How to Use a Payment App without Getting Ripped off." USA Today. March 16, 2018. Accessed March 29, 2018. https://www.usatoday.com/story/tech/columnist/2018/03/16/venmo-scams-how-use-payment-app-without-getting-ripped-off/422535002/

7. Perez, Sarah. "Zelle Users Are Finding out the Hard Way There's No Fraud Protection." TechCrunch. February 16, 2018. Accessed March 29, 2018. https://techcrunch.com/2018/02/16/zelle-users-are-finding-out-the-hard-way-theres-no-fraud-protection/

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