Is It Safe to Link Your Financial Accounts to a Payment App?
Payment apps like Google Pay, Cash App, and Venmo have become the preferred method of sending and receiving money for many people. Yet, you may be hesitant to jump on the bandwagon due to concerns about the security of using a payment app — and you’re not alone.
Many people who are accustomed to using cash, credit cards, and checks are skeptical about entering their financial information in a payment app.
What is a payment app?
The Balance Money writer Eric Rosenberg defines a payment app as a tool to easily pay for goods and services or send money to people. “You link your bank account information and credit cards to the app, and it securely stores it so you can use it to send and receive money directly on the app.”
When you have a payment app on your smartphone, you don’t need to carry your wallet, cash, or checkbook with you anymore. You can even store loyalty cards, boarding passes, and event tickets in one place on your phone.
Most payment apps involve an online account that holds money you add to or receive until it’s spent or transferred out of the account. Some apps skip the intermediary account and transfer money directly between your financial account or credit card and the recipient’s.
Most leading payment apps are free to download and use. However, some specific functions or services within the app may incur a fee. For example, “if you opt to link your mobile payment app to a credit card, instead of to a debit card or current account, you’ll see a fee of roughly 3% from your credit card provider,” points out Rebecca Goodman of NerdWallet. You can also be charged for international transactions or transferring money instantly without processing delays.
Regarding the security of payment apps
When answering this question, Medium contributor Roman Glushach affirms that payment apps like Apple Pay are designed with security and privacy in mind by using functions like tokenization. Your mobile app doesn’t share your card or account information; instead, it generates a unique Device Account Number and a series of random numbers for each transaction. This is a robust defense against “sniffing” for mobile payment data, which is a common hacking method.
Safeguards like PIN requirements or biometric authentications also make it hard for thieves to break into your app and steal your financial information.
Still, payment apps are not 100% free of risks such as scams, technical glitches, and user mistakes. Goodman points out that mobile payment apps don’t have safeguards like Financial Services Compensation Scheme protecting your funds and instead operate on an electronic money license.
Choosing a payment app
Choose a reputable payment app; stick to using only the most well-known and highly rated payment apps that have a track record of security to withstand bugs and breaches. These apps typically have the best encryption of your personal financial information.
Rosenberg lists the best current payment apps as PayPal, Cash App, Venmo, Zelle, Google Pay, and Meta Messenger. Other financial experts include Apple Pay, Samsung Pay, and Zelle on the list of recommendations, too. Each one has different benefits, so choose the one that best suits you by considering the operating system of your device, if you frequently use it through social media, who you send money to, and the functionality of the app itself.
Still concerned about the safety of payment apps? There are additional security measures you can take. Set up payment notifications to be alerted to transactions you didn’t enact, enable two-factor authentication, and opt in to automatic updates to have the latest security patches. Never leave your phone unattended, and avoid using unsecured public Wi-Fi.