The world is increasingly moving to a cashless state as more and more mobile apps that enable digital transactions become available to consumers.
According to Square Capital, the percentage of cashless business almost quadrupled in the first two months of the start of the pandemic, increasing from 8% to 31% during that time — a trend that is bound to continue accelerating in the coming years as phones and apps become faster, more seamless, and more secure.
Top Payment Apps to Consider
Ready to find the best option for you or your business? Let’s take a look at some of the leading payment apps on the market.
Square is a digital POS app that lets businesses accept contactless and remote payments over a mobile device. The app also works with a card reader for Visa debit card and Mastercard payments.
Square is one of the most popular payment apps for merchants and retailers. Why? Because they have an incredibly competitive fee structure.
- 2.6% + $0.10 for dipped (chip reader), swiped (magstripe), or tapped (mobile payment) transactions
- 3.5% + $0.15 for keyed (card-not-present) transactions
- and 2.9% + $0.30 for online transactions
Plus, there are no statement fees, monthly fees, or monthly minimums. If you’re just getting your business off the ground, using Square Payments could be a great option.
However, if you’re not a merchant or retailer, the company also offers Square Cash, which is an app similar to Venmo that enables consumers to securely send and receive digital payments.
Cash App is a mobile platform and peer-to-peer money transfer service from Square that you can use to send money for free to any of your contacts. In addition, the app lets you invest in stocks and bitcoin for as little as $1 at a time.
The app can also serve as a way to receive direct deposits and ACH payments, making it an ideal service for processing paychecks. Users can choose to have an optional Visa debit card to withdraw funds from their account or ATM and make purchases from retailers.
In order to use Cash App, you need to have a functioning bank account.
Another leading service in the payment app industry is PayPal, which is a fast, safe, and convenient way to wire money or make payments online (e.g., for e-commerce transactions). You can have a PayPal account for both Android and iPhone, and it’s free to use, though sometimes you might get hit with fees.
PayPal recently introduced some new features to their platform, including Pay in 4, which lets you pay in installments without incurring interest.
In addition, PayPal has announced that the company can accept cryptocurrency as a payment option. This means you can use Bitcoin to make certain transactions.
One thing to keep in mind when using PayPal is it can take between three to five business days to fund your account, and holidays and weekends may affect the timing of deposits.
Venmo is a digital wallet that you can use to conduct a variety of digital transactions, like paying others, money transfers, and shopping. Venmo is one of the most widely trusted payment apps, with more than 60 million people on their platform.
One of the interesting features about Venmo to be aware of is that there is a social aspect to it, with a news feed that you can use to view public transactions. For example, your news feed may show that Juan paid Joe $25 for lunch. This is something to keep in mind before making transactions. If you don’t want others to see a transaction from your Venmo account, you have to make it private, which is probably a smart move.
Zelle is a leading mobile payment app that works in conjunction with 30 major U.S. banks, including Chase, Bank of America, and Wells Fargo. The app also works with credit unions for added convenience.
Zelle was designed to streamline digital money transfers, enabling users to wire each other money over mobile devices instead of having to run to ATMs or mail checks. Zelle enables you to safely transmit funds to people you know using an email address or phone number. For extra convenience, the app can easily sync to your phone’s contacts.
To use Zelle, simply enter the amount you want to send to a contact. If that person is enrolled in Zelle, the money is automatically transferred to their bank account in a matter of minutes. That person also receives a notification explaining how to receive the funds.
Zelle is one of the most popular mobile payment options — and something that everyone who is eligible should consider using to send and receive funds.
If you’re an iOS user, you can use the Apple Pay app to make contactless payments and secure online purchases over your devices. Apple Pay works in stores, on the web, and in apps. In addition, the app lets you transfer money to friends and family through Messages, which is very convenient and secure.
Apple is also running a promotion that can provide 2% cash back when you use Apple Pay with Apple Card (a virtual credit card). Not bad!
If you’re an Android user on a Samsung device, you can use the Samsung Pay app with your favorite cards to pay in person, online, or in an app. Samsung Pay also offers cashback opportunities that you can use to earn rewards for shopping.
Samsung Pay now supports over 1,000 banks and credit unions, and the company is anticipating further growth. The app is now accepted at millions of locations, making it a convenient option for consumers.
Another great feature about Samsung Pay is you can authenticate purchases using a fingerprint, PIN, or eye scan for added security.
Google recently relaunched the Google Pay app, adding a variety of exciting new features that transform the app from a peer-to-peer payment service to a more robust financial offering.
Google Pay now contains three new tabs, including Pay for P2P payments, Explore for discovering discounts and offerings from retailers, and Insights, which can sync with your bank accounts and let you gain an overview of your finances from a single dashboard.
What is a Mobile Payment App?
A mobile payment app can be defined as a financial app that works with either iPhones or Android devices. With an app and a linked bank account, you can perform a variety of financial transactions from any location.
Here are some of the things you can do with a mobile payment app.
You can use mobile payment apps to transfer money from your checking or savings account to friends, family members, and strangers to make online payments.
For example, you may go out to eat with someone and decide to split a bill. Or, you may want to give someone a cash gift. You can use an app like Zelle or Venmo for both of these transactions, without having to go through the hassle of visiting a bank or ATM (more on Zelle below).
Some mobile apps also let you make payments to merchants or conduct in-store payments.
Many stores are now enabling contactless transactions, using a technology called near field communication (NFC).
What is NFC?
In layman’s terms, NFC is a very short-range mobile technology that enables consumers to transfer data securely between devices.
Most phones can now remember credit or debit card information, so all you have to do is tap a phone against an NFC-enabled terminal at checkout and your phone can automatically process the transaction. NFC is becoming a top digital payment technology, and it’s continuously improving. Thanks to NFC, memorizing your card number can be a thing of the past.
Check Your Balances
Some payment apps go beyond making payments and also let you check the status of your accounts and finances. For example, you can use some apps on your iPad or even your Apple Watch to monitor your credit score and balances.
So, what are mobile payment apps and why are they beneficial? Let’s take a closer look.
The Benefits of Using Mobile Payment Apps
There’s a reason mobile payment apps are becoming more and more popular: They deliver a ton of benefits to the average financial consumer, which we’ll briefly examine next.
Enhanced Payment Security
Mobile payment apps use various techniques to protect transactions from cybercriminals.
For example, some apps may generate random one-time tokens during transactions instead of requiring users to enter their actual account information. This type of technology can prevent users from having to enter debit or credit card data into potentially insecure point-of-sale terminals.
In addition, most mobile payment apps are fully encrypted and utilize the latest security advancements to protect user accounts and prevent identity theft.
By using mobile payment apps, consumers can make payments without having to break out their debit cards or use cash. It’s a much safer and more sanitary method of transferring money, which is important for the post-pandemic economy. Simply put, using mobile payment apps can help limit the spread of germs.
Smartphones can make payments faster and more convenient, allowing consumers to make payments from any location over a mobile device. Consumers no longer have to rely on plastic credit cards, gift cards, or cash to facilitate transactions.
Tips for Using Mobile Payment Apps
Before you get started with mobile payment apps, here are some tips to help you get the most out of your experience.
Keep a Running List of Your Apps
As you can see, there are many mobile payment apps to choose from. Oftentimes, users tend to download several different apps and lose track of what they have on their phone — a dangerous move when apps contain access to financial accounts.
Keep a running list of apps and consider deleting services that you rarely use. You can always reinstall an app if needed. It’s better than having apps sit dormant on your device for a long period of time.
Practice Security Hygiene
If you’re using your phone for financial transactions, be careful about the other types of activities that you do on your phone — like downloading content and playing mobile games.
It’s also a good idea to log out of your payment apps when you’re not using them. What’s more, you should also use whatever multifactor authentication services the apps offer. By doing so, you reduce the chances of identity theft and unauthorized access to your account.
Watch Your Spending
When using mobile apps to make purchases, it can be easy to lose track of how much is flowing out of your account at bars, restaurants, and social events. With just a mindless tap of your phone, big chunks of your hard-earned money are transmitted out of your account with barely a thought.
Best practices call for keeping a budget and tracking spending to avoid going overboard and getting yourself into financial trouble.
Use Mobile Alerts
Mobile payment apps can increase your chances of experiencing security issues. As such, it’s a good idea to set up mobile alerts to let you know when transactions take place in your financial accounts. Keep a close watch on your security to avoid running into unexpected fraud issues.
Always Keep Cash On Hand
As powerful as mobile apps can be, they’re only effective with a fully-functioning phone or computer. Imagine what would happen if you were out and your phone died or broke and you lost your digital wallet. All of a sudden, you’d be stranded.
For this reason, you should always keep a reserve amount of cash on hand in a secure location in case of an emergency. Cash is still king, and it can save your life. Never go anywhere without cash on you, or you could wind up in a dangerous predicament.
Should I use mobile payment apps?
Mobile payment apps can provide fast and convenient access to your money, enabling you to carry less cash and rely less on your debit card.
The fact is people today are using their phones more than ever, so it makes sense to use them to pay for everyday items like meals, products, and transportation.
Do mobile payment apps have high fees?
The majority of mobile payment apps don’t charge for P2P payments as long as you use a debit card. If you use a credit card, you might be charged a small transaction fee.
You may also have to pay transaction fees when transferring money to a bank account or buying something from a merchant (e.g., on PayPal).
Can you use multiple payment apps?
You can use as many payment apps as you want. There is no limit to how many mobile payment apps you can have on your phone at any given time.
That said, having multiple active payment apps can be risky. Consider working with a preferred system and avoid keeping accounts open that lay dormant for long periods.
Can I trust the Zelle app?
We’ve all been there: You’re out with a friend and split a bill and that person asks if you use Zelle to transfer money. What do you say?
In short, you shouldn’t feel skeptical at all about using Zelle to send and receive money. Your contact won’t be able to view your balance or take money out of your account without your consent. You are going to have to provide access to specific amounts of cash upon request.
Is NFC secure?
NFC isn’t impossible to hack; nothing is. Still, it’s very difficult because the individual would need to be in very close proximity to break into your account. In addition, both devices would need to be in active mode. Having one device in passive mode would make it impossible to transmit information between the devices.
As such, when using NFC, it’s a good idea to keep the device in passive mode until you decide to use it for a transaction. If you take this approach, you are most likely going to remain secure.
What is a mobile wallet?
A mobile wallet or digital wallet is a type of virtual storage system that keeps payment card data available on a mobile device. You can use a mobile wallet to make purchases from online retailers and brick-and-mortar stores.
What is a crypto wallet?
A cryptocurrency wallet is an app or platform that lets you store and access cryptocurrencies like Bitcoin and Ethereum. For example, you can use a service like Coinbase to store all your crypto coins in one place, monitor their growth, and buy and sell as you please.
Are mobile payment apps instant?
Some apps like Zelle allow you to instantly transfer funds without having to wait for payments to clear. However, some apps like PayPal can take several business days to complete certain transactions. Make sure you understand each platform before you use it, so that you don’t get stuck waiting for providers.
The Bottom Line
Mobile payment apps are quickly rising in popularity and are an excellent option for consumers who want a flexible and convenient way to access money.
You can use mobile payments to send and receive money from trusted contacts and to make purchases from online merchants or certain brick-and-mortar retailers. Mobile payment apps are now widely used by small businesses and large enterprises alike. In addition, most major financial institutions like Bank of America and Chase now provide easy and free access to mobile payment apps.
Just remember to be smart about using mobile payment apps and keep a close watch on any personal accounts that are linked to third-party financial services. Each app that you use is essentially a gateway to your account for a hacker or cybercriminal. So it pays to be vigilant about fraud and abuse.
Mobile Apps and the Digital Economy
It’s a good idea to get comfortable using mobile apps now, as they are quickly becoming the preferred payment method for many individuals and businesses. While mobile payment apps are still a new and strange experience for many, it’s the direction the economy is moving. The sooner you get on board, the faster you’ll be able to get comfortable using them and figure out the one that’s right for you.
If you’re new to using mobile apps, try downloading a few of the above-mentioned services and practice using them. After one or two transactions, you’ll see just how easy and effective they can be.
There’s only one question left: Which app will be the first one you install on your phone?
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