The Benefits & Dangers Of Cash Transfer Apps
Cash transfer apps (or P2P payment apps) such as Paypal, Venmo, and Cash App have become increasingly popular recently. Most people have used one of these apps to send or receive money because it is convenient.
While cash transfer apps are convenient and easy to use, these apps also carry risks. Here’s what you need to know about how cash transfer apps work and the limitations they present.
The primary function of Cash App, Venmo, Zelle, and other similar apps is to pay people and get paid in the simplest way possible. Cash transfer apps only work once you have linked them to your bank account or a debit card that’s linked to your bank account. Once someone pays you through one of these apps, the money “sits” in your app account until you transfer it to your bank. Once initiated, the transfer typically takes anywhere between one to three days.
Although it takes up to three days for the money to show up in the receiving account, the money is immediately withdrawn from the sender’s balance in the app or directly from their bank account. There’s no way to pause or stop the process once it’s initiated. That means once you initiate a payment to someone else using the app, you can’t get the money back unless the person on the receiving end voluntarily sends it back to you.
There are several benefits to using cash transfer apps, which is why they are so popular. These benefits include the following:
No monthly fees for the most popular cash transfer apps
No fees to receive or send money (if you’re willing to wait a little longer to receive it)
Ability to make transactions with any funds sitting in your cash transfer app
While there are plenty of benefits associated with cash transfer apps, there are also some drawbacks. One of the most obvious drawbacks of these apps is the inability to get your money back once you initiate a transfer. Remember, a cash transfer app functions just like cash. Once you pay someone, you can’t cancel the transaction or get your money returned to you (unless the recipient chooses to return it).
If you’re wondering how to dispute cash transfer app charges, the bad news is you can't. Once you initiate a cash transfer, the money is no longer yours. Any attempt to dispute cash transfer transactions after the fact will be unsuccessful and your financial institution can’t do anything to get the money back to you. Many people are unaware of this despite accepting such apps' warnings, terms, and conditions before using them. Before sending money to anyone using a cash transfer app, make sure you trust the recipient.
Unfortunately, even in cases when scammers fraudulently take your money through Venmo or Cash App and never deliver the promised product, there is nothing your bank can do to reclaim the money. You have basically handed your cash to the fraudster, and the only way to get it back is by convincing the fraudster to return it. This is a highly unlikely outcome.
Rules for Safe Cash App Use:
Only use a cash app if:
You know the person
Or you have physical possession of the promised product and can confirm it is not fake
Avoid making any transfers via public Wi-Fi
Double-check the recipient's phone number and/or email address when sending money. If you enter the incorrect information, your money will be routed to someone else, and you will have no recourse
Don’t fall for popular scams online:
Tickets to sporting events or concerts
Puppy selling scams
Fraudulent romantic relationships that involve cash transfers
Adjust your privacy settings to keep your transactions private (fraudsters can learn about you by analyzing your public purchases on Venmo)
Never use P2P services for business transactions
Lock your phone and app with a fingerprint ID, a PIN, and/or two-factor authentication any time the additional fraud protection is offered
If you’re wondering how to use cash apps safely, the answer is simple: only use them when paying trusted friends and family members. For all other transactions, rely on more secure payment methods, like a credit card or debit card. But keep in mind that no payment system is impervious to risk. Always be vigilant, protect your financial information, and make sure any transaction you make with someone you don’t personally know carries a low risk of fraud.