Use caution when paying friends with a phone tap


By Steve Rosen, Tribune Content Agency

When it's time to split the tab after a meal with friends, members of my generation are likely to hand over cash to the person who put the total amount on his or her credit card, or offer to pay the bill next time.

But younger generations are comfortable settling up with Venmo, Square Cash, Google Pay or Zelle.

All are formally known as peer-to-peer payment plans, or P2P. As my youngest son said, P2P apps are fast, "easy to use and ubiquitous."

And, as a dad, I would add this: Be careful how you use them.

Consumer Reports recently reported that 79 million consumers will use P2P payment services this year, up 24 percent over 2017. That will account for about $700 billion in payments.

If you're not familiar with these services, here's how they work: Start by downloading a free app, create a user profile and input the account number of a payment source, such as your credit or debit card.

When it's time to transfer money to another's bank account, you'll need the recipient's smartphone number, email address or special identification tag. You can also invite that person to sign up for the same P2P service you are using. Select how much money needs transferring, and press send.

Regardless of the payment platform you use, always make sure you are paying the right person before hitting the "pay" button.

Even the P2P plans recommend making transactions only with family and friends.

That tells you something about the ease of getting your money back if a mistake is made. Depending on your plan's terms of agreement, if you send money through a P2P system, you're not covered for any losses because you authorized the transaction. However, if you've been victimized by a hack, you generally are protected.

Consumer Reports recently tested five P2P payment services to see how they stacked up for user protections against scams, identity theft and data privacy.

The magazine rated Apple Pay the highest, although it said the others tested -- Venmo, Zelle, Cash App and Facebook's P2P -- rated good enough to use for consumer protection purposes.

Here are suggestions from the Federal Trade Commission on how to pick the best peer-to-peer plan, including what to pay attention to in the fine print.

* Make sure you know to whom you are sending money. Scammers try to get you to pay them in many different ways. For example, if you use the service to receive money from someone you don't know, say for an item you are selling, make sure the money is in your account before you send any goods.

Read the terms of service on your plan if you're not sure these kinds of transactions are permitted on the plan you use.

* P2P payment systems require access to your financial information, so check your plan to see if you can add security measures that aren't on by default.

* Some plans offer rewards programs. Cash, for example, recently launched a program called Boost, where you can save 10 percent on purchases through certain retailers and $1 offer from your favorite coffee shop.

* Check on fees. Venmo, for example, charges a 3 percent fee when paying with a credit card.

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