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CHIPS Articles: Paying your friends through an app? Read this.

Paying your friends through an app? Read this.
By Aditi Jhaveri, Consumer Education Specialist, FTC - June 18, 2015
Imagine you’re at a restaurant with your friend. She pays the check, and says you can pay her back. Do you:

(a) Write an IOU on a napkin?

(b) Pull out a wad of cash and give her exact change?

(c) Take out your phone and pay her through a mobile payment app?

If you answered (c), this post is for you.

Like apps that let you pay at stores with your phone, “peer-to-peer” payment services can be a convenient way to pay friends. But before you use one — or use one again — check the app’s settings for available security features.

Here are some features to consider to make your account less vulnerable:

-- Two-factor authentication: This requires you to enter a password plus something else — like a code sent to your phone — to prove it’s really you.

-- Pin code: Look at creating a pin to send a payment — like a pin you might use at an ATM.

-- Social media permissions: If a payment service is linked to social media, it could broadcast your payment history to your network, so make sure you check those permissions.

As with any kind of money transfer, make sure you know who you’re dealing with before you send any money. Also, know that setting up your payment account with a credit card could offer extra protections.

Check your account statements regularly. That way, you can make sure someone else isn’t using your account and running up the bill. If you find unauthorized charges, report them to the payment service right away.

And if your phone is lost or stolen, treat it like you would a lost credit or debit card, and learn how to remotely cut off access to your account so someone else can’t use it.

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