The Risks of Storing Money in Apps Like Venmo and Cash App
The New York Times The Consumer Financial Protection Bureau is warning that the funds may be at risk if the apps parent company runs into trouble.
Millions of Americans use mobile payment apps to pay friends, family and retailers, but they may not know that money held in the apps often lacks federal insurance protection.
Unlike deposits in savings and checking accounts at federally insured banks, funds stored in many peer to peer apps arent automatically protected, potentially putting cash at risk if the apps parent company stumbles financially, the Consumer Financial Protection Bureau warned in a consumer advisory this month.
As more people go cashless, apps like Venmo, Cash App and Apple Cash have gained popularity as an easy way to split a dinner tab, buy stuff at yard sales or pay bills. Use of the apps increased during the pandemic, experts say, as people shifted to online shopping and contactless payment methods.
Transaction volume on such apps was an estimated $893 billion last year, the bureau said, and is projected to reach $1.6 trillion by 2027. More than three-quarters of the nations adults say they have used one of four popular payment apps, according to the Pew Research Center.
