Do you remember being nervous about withdrawing money from an ATM instead of a teller? Fast forward a few decades: For every financial task, there’s a digital DIY tool that’s supposed to make it easier, faster, cheaper, or safer. But is it really true? Here’s what you need to know about the most common and popular online money tools.
Task: Pay another person
Tool: Money transfer apps
How they work: Venmo, PayPal, Apple Pay, and other “peer-to-peer” payment apps store your credit card or banking information and then allow you to send or receive payments from others who also have an account on this platform. Some stores now also accept payments through these apps, although fees may apply. You can also use these tools on a computer to send or receive money, but again, only to those who have an account with the same service you use.
Are they safe? Some of these apps keep your money safe by “tokenizing” sensitive information, which means they replace your credit card or bank card number with a different, unique code, thereby protecting your account information from potential hackers. Others may use bank-grade encryption to protect your information. These security features make money transfer apps “safer than carrying lots of cash,” says Tom Kamber, founder and chief executive of Technology Services for Older Adults (OATS) AARP and its Senior Planet program, which offers personal technical training.
Advice: With so many money transfer apps to choose from, it’s best to “find out what your friends and family members are using in order to gain peer support,” says Kamber. “Once you get used to one of them, the others are quite similar.” Also make sure to go to the platform settings to see that your transactions remain private. Some services will make this information visible to other users unless you specifically change this privacy setting.
Task: Pay your bills
Tool: Online payments
How they work: Utility companies, doctors’ offices, and other ongoing service providers often offer the option of paying your bill online through their websites instead of sending a check in the mail. Simply log in with your credentials and enter your credit or debit card information. This can be useful for occasional bills, such as a visit to the doctor.
For recurring bills, such as your mortgage payment or utilities, a potentially easier method is to use the bill payment service provided by your bank on its website and mobile app. There you can enter supplier information, which is stored for future reference. When you need to pay a bill, just enter the amount and press submit, and the money is taken from your account and payment sent.
Are they safe? If you use the supplier’s website, be sure to check the URL before paying a bill online. It should contain a small padlock icon next to the site name, and the URL should start with “https” rather than “http”. These elements signal that your information is encrypted – and therefore secure – as it passes from your internet browser to the website server.
Bank websites are highly secure, for obvious reasons. Plus, “when you pay bills online, there’s a digital record,” says Kamber. And there’s no risk of someone intercepting your paper check.
Advice: With both options, you can also set up automatic payments, which can be useful if the amount is stable, like for internet service or cable TV. “Just make sure there’s a little extra cushion in the bank account,” adds Kamber, to avoid overdrafts. Another benefit of online bill payment, especially when using your bank’s service, is that you can schedule the exact date a payment is made.