Well, we are probably in the most gift-giving of gift-giving seasons of the year. No matter your holiday tradition, you may opt to give some form of currency to those special people for whom buying a gift can be difficult.
Once upon a time monetary gifts took the form of cash or a check, placed inside a card. These days it’s more likely to occur as an electronic transaction via Zelle, Venmo or Cash App. Therefore, it is important to know the basic differences between these three peer-to-peer payment (P2P) options, enabling you to make an informed decision regarding how you send money to people on your gift list.
Each app comes with unique features, benefits, and security considerations that you should carefully evaluate, even if you use more than one of these apps. If you choose to gift someone this way, here are some considerations to keep in mind.
Zelle
Generally speaking, Zelle is considered more secure than Venmo or CashApp, primarily because Zelle
integrates directly into the online and mobile banking systems of participating financial institutions. It
links to a user’s bank account only and has no debit or credit card options.
Advantages: It offers real-time transfers between participating banks with funds typically available in minutes. Zelle operates within your bank’s infrastructure, therefore it benefits from bank-level encryption and security and adheres to strict financial security standards. You don’t share credentials with Zelle; they authenticate directly with your bank. There are no fees for transfers and the direct integration into bank apps eliminates third-party risks. Its integration directly into the mobile banking platforms of major U.S. banks makes sending money seamless for account holders, using just an email address or phone number.
Disadvantages: Zelle payments are instant and irreversible. Once you send money through Zelle, it cannot be canceled. This makes Zelle ideal for trusted contacts but risky for payments to strangers as it doesn’t offer purchase protection. You must be ever vigilant to assure that you don’t fall victim to a scam that tricks you into sending money to a fraudster who is posing as a legitimate seller or acquaintance.
Venmo
Venmo is a standalone app that links to a bank account, debit card, or credit card. Users can send, receive, and hold money in their Venmo account, with a 3% fee applied for credit.
Advantages: Venmo offers additional funding source options to include linking your bank account, Venmo balance, debit card, or credit card. It uses encrypted transactions with optional multi-factor authentication to affect a transfer/payment, usually within 1-3 business days, or faster with a fee. Its social features (e.g., emojis and payment notes) are popular with many users.
Disadvantages: Venmo’s optional social feed can expose payment details if you aren’t careful as it
can be a privacy risk if improperly configured. Venmo also charges fees for credit card payments and instant transfers. For better security, ensure social sharing is turned off and privacy settings are configured to avoid exposing payment details.
Cash App
Cash App is another standalone P2P platform that allows you to send and receive money, buy cryptocurrency, and even invest in stocks. It also can be used with a bank account, debit card, credit card, or Cash App balance. As with Venmo, there is a fee of 0.5–1.75% of the transfer amount to affect an instant transfer.
Advantages: Cash App uses strong encryption and optional security features like PIN codes or Face ID as well as additional verification for transfers that you optionally can implement. This platform also offers unique features like cryptocurrency purchases and stock investments as well as the ability to hold funds in a Cash App balance.
Disadvantages: Like Venmo, Cash App charges fees for instant transfers. Due to its popularity, it is a strong target for scammers. To counter this, enable security features like PIN codes, Face ID, or two-factor authentication and be even more vigilant about vetting scams such as fake giveaways, phishing attempts, etc.
Final Thoughts
While Zelle excels in speed and security for trusted contacts, Venmo offers a social experience ideal for friends and family. Cash App, on the other hand, provides versatile features like stock investments and cryptocurrency trading but comes with higher exposure to scams. Regardless of the platform(s) you use, be mindful of the following:
- Know Your Recipient: Only send money to trusted individuals.
- Enable Security Features: Use PINs, Face ID, or two-factor authentication.
- Be Wary of Scams: Avoid offers that sound too good to be true, like “cash flipping” schemes.
By understanding the strengths and risks of each platform, you can enjoy the convenience of P2P payments while keeping your finances more secure.
Courtesy, Karen Clay