The Explosion of Social Payment Apps Is Changing the Way We Share Money
How Peer-to-Peer Payment Apps Make Transactions Convenient and Easy
Worldwide social media usage has been growing steadily since 2014, with 3.2 billion users worldwide in 2019. According to recent statistics from Emarketer, 90 percent of Millennials and 78 percent of Gen Xers use social media daily. Baby Boomers are creeping up in usage rates, as well, with more than 48 percent currently using social media every day.
As social media usage has risen, so has the popularity of social payment apps. Let’s explore how this technology is changing the landscape of how we payment-share with friends and family.
Social-Based Payment Apps to Know
One of the most useful aspects of social payment apps is that several of them allow for simple peer-to-peer payments. Not only do you no longer have to ask the waiter to split dinner among five debit cards, but you can instantaneously send your friends and family money for everything from a shared meal to your half of the rent payment.
The most well-known of these apps is Venmo, which is owned by PayPal and offers a newsfeed similar to Facebook. Users can send or receive money in the blink of an eye, but it’s important to know that all your transactions are posted in the newsfeed for your Venmo connections to see unless you manually change your privacy settings.
Zelle is also growing in popularity. Not only can you download the app onto your smartphone, but more than a hundred banks have partnered with this company to offer Zelle payments within their banking apps. Much like Venmo, you can select a recipient and send money to their account in a matter of minutes.
Of course, social media giant Facebook also offers its own peer-to-peer payments through Facebook Messenger. No longer simply a chat mechanism, Messenger allows you to link a debit or credit card to your account and easily send money with the touch of a button.
While Venmo, Facebook Messenger and Zelle are some of the most well-known social payment apps, PayPal, Apple Pay and Google Pay are also popular.
How are These Apps Used?
The beauty of social payment apps is that they offer convenience and flexibility. While a study by LendEDU found that Millennials are using Venmo most often for purchases like pizza, alcohol and Uber rides, other users may utilize the app to pay rent or their half of a shared Netflix subscription.
Zelle, which sees a wider age range among users due to its partnerships with major banks, is popular for larger payments.
Pros and Cons of Social Payment App Technology
Perhaps the greatest benefit to social payment apps is the total convenience they offer. You don’t have to write checks or get cash out of the ATM to pay your friends, and transactions are user-friendly and quick. Most apps are also free to use.
Of course, when you’re using apps that contain direct links to your bank account or credit card, security and privacy are legitimate concerns. A recent Consumer Reports study of these apps found Apple Pay to be most secure, followed by Venmo, Facebook Messenger and Zelle.
As with any technology, social payment apps are also used by scammers. To protect yourself and your finances, never use these apps to send or receive money from someone you don’t know. Additional protections include never carrying a balance and setting your privacy settings as high as each app allows.
There’s no doubt that social payment apps make peer-to-peer financial transactions easier than ever. However, it’s important to take precautions when using them in order to ensure you’re protecting your financial health.
About the Author
As a Co-Founder, Craig brings years of hands on experience helping clients make informed investment and financial planning decisions. Craig takes great care in understanding his clients near and long term goals and implements an investment strategy around those goals.