Click, Pay, Whoops! Is Peer-to-Peer Payment Secure?

​Do you remember back when you would go to dinner with friends and someone always forgot their wallet or found themselves short of cash? Today, many of us keep our payment accounts just a tap away. With the popularity of mobile pay and peer-to-peer payment apps, you may not remember the last time you had to write a check or go to an ATM.

​Peer-to-peer (P2P) payment apps like Paypal, Venmo, or Square Cash are digital networks that allow users to make virtually instant payments, send money, or even invoice through online apps. The only requirement: having a debit/credit card, or bank account on file. But you may be wondering how safe these options really are. While all the major P2P systems use encryption to protect your private information, some have still fallen victim to hacks or scams. And some, such as Venmo, allow other users in your network to see what you purchased and/or where.

​Mobile payment is great, but there are several steps you should take to make your mobile payments more secure and private:

• Use a unique PIN and password for each app or account to minimize the risk that a breach of your account at one payer leads to account takeover fraud at others.
• Take advantage of two-factor authentication using biometric recognition or confirmation codes sent to your mobile device. While this may add a minute or two to your transactions, the time is worth the extra protection.
• Set up notifications for every transaction. Most credit card issuers or banks allow mobile notifications for purchases, and P2P payment networks have followed suit. While getting a notification for each gas fill-up may be a little annoying, being aware of each transaction from a completely virtual network is a great way to keep an eye out for bogus charges.
• Consider how you will fund your payment account. The FDIC actually recommends linking your bank to P2P networks versus autoloading the account from a credit card. There’s a trade-off here: If someone steals from a bank-linked account, federal law protects your balance up to $250,000, but recovering the money can take time. If you’re using the account for small payments and keeping a small balance, the money may be gone but your exposure is limited.
• Especially on social network-style apps such as Venmo, never pay anyone you do not know. There are numerous scams involving “accidental payments” or bogus sales through sites like Craigslist. Also, check privacy settings and Do Not Track settings, just as you would on any social media site.

​Ultimately, no form of money is 100 percent safe. Stealing is a time-honored tradition, whether the thief picks your pocket or hacks a credit card reader. Peer-to-peer apps and mobile payments offer more protection than carrying cash, so, there’s no reason not to embrace the convenience. Just do it with your eyes wide open and your security plan locked down tight.