If you’ve ever run out of cash for the babysitter, wished you could skip mailing a birthday check, or wanted an easy way to split the dinner tab, you may be considering getting a payment person-to-person payment app, like Venmo or Zelle.
These apps offer convenient solutions to many day-to-day transaction trifles, but they can also be targets for both local scammers and international cyber criminals alike. And for many apps, it can be next to impossible to recover lost money once you tap “send.”
Fortunately, there are steps you can take to ensure your accounts are protected and your funds remain safe. In this post, we’ll discuss the basics of peer-to-peer payments, as well as important safety measures you can take to keep your money secure.
What is a P2P (Peer-to-Peer) Payment?
Users enjoy using P2P payment apps because they are quick and easy. In fact, most of these transactions are completed either immediately or within 1-2 days. So, what exactly are peer-to-peer payments?
Peer-to-Peer payments are payments made with digital tools that allow people to send and receive money to each other directly from and to their bank accounts using their mobile devices. Most P2P payments are completed via a mobile app, though websites can also be used, including some online banking portals. Common third-party P2P payment apps include Zelle, PayPal, Venmo, Cash App, Apple Pay, and Google Pay.
Tips for Safely Using P2P Payments
As with most technological breakthroughs, cyber criminals will find ways to exploit the system to steal funds from unsuspecting users. Because of the popularity and ease of use of P2P apps, they are a common target for individuals and criminal groups committing fraud.
Fortunately, there are steps you can take to help protect yourself.
- Adjust Your Visibility Settings
Some P2P apps, like Venmo, automatically display your transactions to other users. They might be individuals on your contact list or users you are “friends” with, or they may even display transactions to the general public. Details that may be available can include who sent and received the payment (names and profile pictures), when the transaction was done, the payment amount, as well as any comments or captions (like the “What’s this for?” field) that were entered by the individuals sending or receiving payment.
Criminals can use this information to spoof profiles, recreate recurring or common payments, or simply learn more about your lifestyle. To protect your privacy, as well as your money, make sure to adjust the individual transaction settings to be private so only you and the recipient can see the transaction, or change your general settings to limit transaction visibility to just friends or other approved users.
- Only Send Money to People You Know
On many P2P apps, users can send payments and payment requests to anyone at all—as long as they have an email, phone number, or username. However, you should only ever send payments to or receive payments from people you know (and trust) in real life. If paying for purchases made on online marketplaces, be sure you have the item in hand before paying. If you receive payment requests from users or people you don’t know, always report them, ignore them, and delete them.
- Make Sure the Recipient Information is Correct
People may have similar names and mistakes are common. But if you accidentally send money to the wrong user, it may be difficult to recover the funds. When sending payments to another person using a P2P app, always double and triple check that you are actually sending the payment to the right user—especially if it’s the first time you’re sending them money. Many apps allow you to verify a user using other details, like the last four digits of their phone number.
Why won’t you be able to get your money back? Bank P2P payments usually cannot be cancelled or voided once the payment is set in motion, as many rely on direct debits from user bank accounts. Once the process is set in motion, it would be akin to cancelling a check, costly and time consuming. Additionally, if the money is already cleared, it would need to be reissued by that user or refunded by their financial institution—an additional hurdle that is difficult to clear. In short, if you send it to the wrong username, email, or phone number by accident, you likely will not be able to get that money back.
- Enable Two-Factor Authentication
Most financial apps utilize two-factor authentication (2FA), to add an extra layer of security to the login process, requiring a confirmation code sent via email or text, or biometric (facial/fingerprint) recognition. If you are given the option to enable two-factor (or multiple-factor) authentication on your P2P apps, banking apps, or online banking login, you absolutely should.
It may take a few extra seconds to complete the transaction with 2FA, but it will provide much more security than if you didn’t, making it more difficult for long-distance hackers and cyber criminals to access your accounts. If you are simply relying upon a password—especially an easy-to-guess or reused one that was involved in a data breach—you are leaving your accounts unnecessarily vulnerable to nefarious actors.
- Check for Confirmation
When using a P2P app to send or receive money, you will receive a notice of completion within the application. Additionally, you should also receive a text message or email confirmation that the payment was successfully completed—a backup in case a glitch or error occurs.
If you don’t receive or see an official confirmation email promptly after the transaction, then double check with the other user to confirm completion on their end, or contact your bank to review transactions from your account. This could be a sign that someone has changed your associated phone number or email address.
- Keep an Eye on Your Bank Statements
If you use P2P apps, it’s good practice to cross-reference your digital payments with the official transaction record from the bank account that is linked to your P2P app regularly. This can help ensure that all transactions sent or received were successful, and help you catch any potential fraudulent transactions and alert your bank about them. The best online checking accounts will offer easy ways for you to check your transactions and keep a close eye on your transactions—without waiting for your monthly statement.
Sometimes there will also be hidden fees associated with transferring money into your bank account from your P2P app, for instance, if you choose an expedited transfer. Checking your account can also help you catch these fees, ensure they’re accurate, and take steps to avoid them in the future.
- Be Vigilant About Payment Scams
As we mentioned earlier, scammers have come up with many different angles for defrauding payment app users. While it can be difficult to keep up with individual scams, knowing the general forms they can take (and knowing to be vigilant!) can help protect you from falling victim.
Oftentimes, these scammers prey on individuals in desperate circumstances—or create stressful circumstances—using emotional leverage to get individuals to let their guards down. Some may target individuals, including seniors, who are in need of securing a service or housing. Some may target parents or grandparents, pretending to be a child or grandchild in need of help. Some may pretend to represent government agencies, banks, utility companies, landlords with rentals, insurance companies, or medical facilities. Know—legitimate companies and agencies will ask for more secure payment methods—not payments through apps which have fewer protections.
Lastly, scammers may also try to trick you into giving them direct access to your P2P account, by posing as a representative of the app or your financial institution. They will usually request login credentials or a security code but may also send you a text or email with a link that sends you to a website that requests this information. If you receive a request of this kind, ignore it and reach out to the payment app or your financial institution directly to verify its legitimacy. And for more tips on how to protect yourself, check out our post #BanksNeverAskThat: How to Spot and Avoid Scammers.
- Stick to One or Two P2P Apps
Ultimately, you can do yourself a big favor and reduce your risk by keeping things simple. While there are many different P2P payment app options out there, in order to keep your information and financial information as secure as possible, consider limiting yourself to using only one or two of them.
The more places you link your bank account, the more opportunities there are for fraudulent payment activity to occur and more chances for your bank account information to be accessed by hackers. And sticking to just one or two P2P apps also allows you to closely monitor the payment activity.
Get Started with P2P Today!
P2P accounts may be one of the latest additions to financial technology, but most P2P apps require a traditional bank account to open. That’s why choosing the right partnering financial institution—one that values security—is essential to help ensure the safety of your money.
At Moody Bank, we value our customers’ account privacy and security, and work hard to keep your accounts safe. From two-factor authentication for online and mobile banking to local, dedicated team members ready to assist you and answer your questions, you can count on us to put your financial safety first.
Ready to take advantage of the ease and convenience of P2P? Call or visit your local bank branch in Greater Houston, Galveston, Austin, and along the South Shore in Texas to learn more. You can also open a Moody Bank Personal Checking or Savings Account online, from the convenience of your home!
For more cybersecurity tips, check out these other great Moody Bank Resources: