What parents need to know about P2P payment apps as Venmo adds teen account
Maskot | Maskot | Getty Images
As new peer-to-peer payment app choices emerge for youngsters, consultants say it is a possibility for parents to educate their youngsters how to use these monetary instruments correctly — and educate them on how to keep away from common pitfalls.
Venmo on Monday unveiled a new teen account that permits parents to open a linked account with choose options for youngsters ages 13 to 17 years previous. While some youngsters already use Venmo, particular person accountholders should be no less than 18 years previous (or the age of majority of their state), per the app’s user agreement.
This is not the primary peer-to-peer payment app to develop to teen customers. Cash App, Square Cash and Apple Wallet additionally supply options for teenagers, albeit with parental supervision. PayPal, mother or father firm of Venmo, nonetheless requires customers to be no less than 18 years previous (or the age of majority of their state).
More from Personal Finance:
How to capture higher savings yields with a CD ladder
3 steps to take as investors worry about a recession
Here are the health savings account limits for 2024
The Venmo teen account features a debit card and might be funded by a mother or father’s Venmo account via any linked sources. Parents can monitor their teen’s funds and good friend requests, as nicely as management privateness settings.
Apps are ‘handy,’ however woes might be ‘tough to repair’
Peer-to-peer payment apps, additionally identified as P2P apps, are extensively used all through the U.S., utilized by 64% of adults, together with 81% of these ages 18 to 29 years previous, in accordance to a 2022 report from Consumer Reports.
Teresa Murray, a client watchdog on the U.S. Public Interest Research Group, urges warning when utilizing P2P apps. “There are actual penalties if one thing goes fallacious,” she stated.
U.S. PIRG examined practically 9,300 complaints obtained by the Consumer Financial Protection Bureau between April 2017 and April 2021, and uncovered a sample of points amongst a number of P2P apps with digital wallets, scams and customer support.
“People use these P2P apps as a result of they’re handy they usually’re simple,” Murray stated. “But it is very inconvenient when one thing goes fallacious.”
“It’s tough to repair it, and folks simply do not understand that up entrance,” she added.
Nearly one-quarter of customers have reported sending cash to the fallacious particular person, a 2022 survey from LendingTree discovered, whereas 15% have been victims of scams.
“We have a zero-tolerance coverage on our platform for tried fraudulent exercise, and our groups work tirelessly to defend our prospects,” a PayPal spokesperson advised CNBC. “We encourage prospects to at all times be vigilant on-line and to contact customer support immediately if they think they’re a goal of a rip-off.”
Protecting teenagers from frequent P2P payment points
Whether your teen is utilizing Venmo or one other P2P app, Murray stated it is necessary for each mother or father and little one to be acquainted with the potential dangers.
For instance, she means that customers fund P2P accounts with a bank card moderately than a checking account as a result of there a larger protections below the Truth In Lending Act and Fair Credit Billing Act if one thing goes fallacious. And for those who do hyperlink to your financial institution account or a teen’s, preserve nearly all of your money elsewhere.
Murray additionally suggests solely paying “folks you know nicely” by way of P2P apps and asking them to ship you a request by way of the app earlier than making a payment for the primary time. “Once you might have accomplished a transaction, it is accomplished,” she warned. “You’re not getting your a reimbursement.”
Teens also needs to make transactions non-public, add additional authentication to entry the app from their telephone, and be vigilant when sharing their gadget with others, she stated. They can also thwart scammers by by no means sharing authentication codes with anybody.
Talk to your teenagers about cash
As your teen learns about budgeting and payment apps, consultants urge parents to talk about these subjects at residence.
“The greatest tip I can supply is to preserve that communication going along with your teen about cash,” stated licensed monetary planner Desiree Kaul at Main Street Planning in Satellite Beach, Florida. “As lengthy as your little one feels snug asking you questions, they’ll at all times have somebody to flip to when they need a solution.”