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Beacon Senior News

Ditch the cash for third-party payment systems

Sep 27, 2021 11:48AM ● By Adam Cochran
In the background, three one dollar bills, two quarters and a dime. In the foreground, an iPhone has the Venmo app open

Apps like Venmo, PayPal and Zelle are handy and secure


Using a third-party payment system to send or transfer money may sound scary. However, many people have embraced alternative payment platforms like PayPalVenmo and Zelle because they make life a lot easier. So, let’s discuss the obvious questions and concerns people often have about these apps.


SECURE TRANSACTIONS

No human ever sees your bank or credit card information. When you put this information into a secure website or app like Amazon, eBay, Venmo or PayPal, it’s encrypted using a system that even the government can’t decode. 

Tech-savvy hackers go after large pots of money stored in insecure locations. It’s a waste of time for them to hack into major secure platforms because they’d have to break a new code for each individual and punch through countless security blocks along the way.


Bad guys that commit credit card fraud are usually common thieves. It’s more likely for a gas station attendant or restaurant worker to skim credit cards they’re handed and give that information to an accomplice who keeps a pool of stolen information and distributes it. That’s why a stolen credit card may be used 10 minutes later at a Target 300 miles away.


All non-cash financial transactions take place online—all of them. When you use your credit or debit card at Target, the process of transferring the money is functionally identical to the process of placing the information into your web browser to order from Target.com. 

If you’ve ever used your debit card to pay for something, you’ve used the same technology. All businesses that take cards use a third party to transfer the money from the customer’s bank or credit card to the business. Likewise, Zelle, PayPal and Venmo are third parties that facilitate a secure transaction between both business and private parties for a small percentage of the transaction.

Mailing an envelope full of cash to Amazon.com, for example, is far less secure and offers no protection against fraud. All card payments and most digital transfers are guaranteed and protected by the card company or payment platform.


GOING CASHLESS

Now that we’ve addressed the security of digital payment methods, let’s talk about its benefits.

When my sister got married a few weeks ago, I connected her laptop to the PA system and played music for people to dance at the reception. As I searched for songs on Spotify, her computer kept pinging Venmo notifications in the upper right corner every few minutes. The newlyweds had a gift table with a box for honeymoon cash, as well as a sign with the couple’s Venmo ID, which they’d also posted on social media. The money box probably didn’t even have 20 one-dollar bills in it.

Over the summer, I’ve been to numerous yard sales that accepted cash, PayPal, Venmo, etc. Personally, I’ve used it to buy and sell items from classified ads or accepted payments for helping people with their computer issues. 

Finally, you can use alternative payment platforms for businesses that don’t take cash like Amazon, iTunes, Netflix and Spotify. Facebook and Walmart also have their own cash alternative apps. Think of these platforms as bank accounts that anyone can open and use, but are typically instantaneous and can’t be overdrawn. Each company also provides debit cards to make the money in your account available anywhere that takes cards.

If you want to test an alternative payment platform, transfer money with a close friend or relative as practice. Send or receive a small amount like $1 to see how it works. If you don’t feel safe, you can always close the account and go back to writing checks and paying with cash.


More like this: Confessions of an online shopping skeptic