What Is the Safest Internet Money Transfer Service?
Dear Lifehacker, Services like Venmo , Square Cash and other instant money transfer services make it easy to send money to friends, split a check, or pay rent. However, Venmo has just been called due to weak security and now I am terrified. Which of these apps are safe? Can I trust them?
Regards, Mobile Moneymaker
Dear Mobile Moneymaker! Money transfer services that allow you to send money from your bank account to anyone with a few clicks on your computer or a few clicks on your smartphone are quite popular. If you’re in the habit of sending money to a friend by email or phone number, instead of asking them for banking and routing information, this can be really handy. It’s even better if you live far away from each other, don’t carry cash, or want to send money instantly instead of waiting for your bank to process the funds.
However, whenever you provide service access to your bank account, you also open the door for identity theft, money theft, fraudulent transactions, or something worse. As you mentioned, last week Venmo, one of the most popular apps of this type (owned by Paypal), was caught in a nasty hack that ended up with one user out of several thousand dollars. Subsequently, the company, without much enthusiasm, agreed to tackle its security problems .
How safe are these services in general?
On the surface, all of these services are doing the right thing. They all use SSL to protect your identity and activity while using their applications and websites. They all keep your personal data encrypted, keep your passwords secret and hashed, and do their best to ensure that communication with your bank and other users is always encrypted and direct so that no one spies on them.
They all have security policies and man pages that say the right thing. They warn users to avoid phishing emails, monitor their transactions, and avoid authenticating too many devices. For example, Venmo’s security page explains how they use bank-grade encryption to secure your account, as well as how you can set up a PIN to prevent unwanted access on your device. They also explain how to disconnect a device from your account if it is lost or stolen. Square Cash goes a step further and explains that they are PCI compliant (Venmo, to be honest). Other than that, they only have instructions on how to avoid phishing and other fraudulent attempts. On the other hand, they all store your data encrypted, so a hack can get email addresses, names and encrypted passwords, but most likely not transaction histories, bank account information, balances, or anything confidential. Of course, Venmo users are quite poor at publishing transaction histories , which is a problem in itself.
However, neither Venmo nor Square Cash (or many others in the area) have basic security features like two-factor authentication or notifications when your password has been changed or reset, or when a new device has been added to your account. Some don’t even have mandatory notifications when processing a transaction. In Venmo’s case, this – combined with one user who had notifications disabled for every transaction – resulted in over $ 2,000 in spoofing for the user , which he then had to try to recover through his bank, thanks to the fine print. in the Venmo service agreement.
PayPal’s security homepage is a deeper dive than either of the other two (and most other mobile payment services), however, largely because PayPal doesn’t just send money – it’s actually a bank. They have more rules to follow and while PayPal certainly has its problems , they offer more information on how they protect your account, how you can further protect your account, and how to file disputes with them. , chargebacks and other problems. To their credit, PayPal offers two-factor authentication and notifications for account changes such as password resets. PayPal is Venmo’s parent company, however, and the fact that these security features have yet to be implemented is an issue.
Google Wallet , for its part, has a ton of information on how to keep yourself safe while using their service, and since they are also a payment processor that you can use to shop online or in person at supported stores, it’s easy to send money to friends and shop with your Google Wallet account. However, putting money into your Google Wallet is easy, and using Google Wallet to shop is easy. Getting your money back like someone sent you money or want to transfer the balance to your bank account can be quite difficult. This is good from a security standpoint, but definitely less convenient than some other services.
Which ones are the safest?
In their opinion, PayPal and Google Wallet would be the safest. The rest are new, and their goal is to make sending and receiving money convenient. This convenience comes with sacrifice. PayPal and Google Wallet create additional blocks that make it harder to access money sent through the service, which also means it’s harder for you to get your own money when you want to.
However, this does not make any of the services “tamper-proof”. In the past, at PayPal had their concerns about safety . It has never been widely invaded , but that doesn’t mean it’s impossible. Google Wallet has undergone a series of hacks . All of this simply means that both services have broader corporate support, more emphasis on security, and more resources to devote to security. It’s a thin screen, but bigger than the competition.
With Venmo, Square Cash and others, if you link the app directly to your bank account using its account number and routing number ( Update : Square Cash, on their credit, only allows you to link a debit card, not direct banking information), you You can send and receive money instantly from anyone, anytime, without waiting for money to be deposited or banks pretending that it takes “business hours” to process money electronically. However, the downside to this is that if your Venmo or Square account is compromised, as well as your bank account or debit card, they can help you, but you (as the victim of the Venmo case ) will most likely have to close your bank account and open a new one before you can access your money again, which is a huge challenge.
In short, the same features that make these apps convenient and fast open the door to social engineering and phishing attacks .
What are the alternatives?
There are several alternatives to these cash payment services, although they may not be as convenient. The luxury of sending cash to someone using just their phone number or email address is a pretty big attraction. It is worth looking at what your bank has to offer, though. Most banks allow you to send money to others just as easily, either through their mobile apps or on their websites. For example, Chase offers Chase Quick Pay , Wells Fargo offers Wells Fargo Sure Pay , and Bank of America offers a similar service , but without a name.
Most of the time, if the person you are sending to is in the same bank, all you need is their email address. Money is transferred immediately, instantly appears in your (or their) account, and there are no fees. If that’s not the case, you might need their account number and routing number, which can be tricky if you’re just trying to split a check or can’t take advantage of a Netflix subscription. You may incur a commission depending on how much money you send, and you may have to wait a business day or two before the money gets to where it goes. This is much less convenient, but since everything happens in every correspondent bank, there is nothing to worry about.
Of course, part of the bill for services like Venmo and Square Cash is that “it’s easy to split the bill for entertainment.” While not always practical, there is always the option to simply split a restaurant check into multiple cards, pay off friends later, or, oddly enough, carry cash with you.
Should I trust these services at all?
With all these security concerns, it is tempting to ditch mobile money transfers. If outrage over Venmo’s safety concerns is any indication, then it isn’t in some people. Many others look at apps like this and immediately say, “I would never trust some random Silicon Valley company with access to my bank account,” and that’s okay too.
However, it would be unfair to say that these services are insecure or that you should avoid them. These startups are new, and while there are certainly security concerns, there is no specific reason why any of these services are inherently unreliable or dangerous. Any application, company or service that deals with money will become a target for people who want to access this money.
If you do decide to use them, make sure you enable every security feature they have and watch your transactions like a hawk. Keep notifications on and reduce the number of devices connected to your account. The most important thing you can do is be smart and vigilant about how you use these apps, and if you can’t or are worried that this is not enough, choose safer alternatives, even if they are less convenient. At the end of the day, you need to strike a balance between safety and convenience, and then make that decision with your eyes open.