Comparing Different E-Pay Platforms
Introduction
The rise of mobile technology spawned the advent of electronic payments, thereby reducing or eliminating the need for cash and allowing users to buy items directly from their bank accounts. Despite the enduring popularity of debit and credit cards, mobile payment apps have taken the world by storm by allowing users to send money to each other and to vendors. Like debit and credit cards, mobile payment apps are linked to users’ bank accounts, but they transfer money directly from mobile devices without the need for cash or a physical card. This post will only cover five of the dozens of mobile payment platforms in existence as well as the benefits and drawbacks of mobile payment.
Popular Mobile Payment Apps
As previously mentioned, there are dozens of mobile payment apps available, many of which are offered through banks or technology companies: Apple, Google, Samsung, and Amazon host their own payment platforms, and many U.S. banks host Zelle, which can be used to transfer money between parties through mobile banking apps. Discussed below are five of the most popular mobile payment apps and their distinguishing features:
1. Venmo: Venmo is a mobile payment platform owned by PayPal that is known for its timeline feed. It links directly to one’s debit card (which needs to be added manually and updated as needed). Venmo has a public setting, which publicly displays transactions to a user’s friends on the timeline on the homepage, and a private setting, which only informs both parties of the transaction. In either case, the dollar amounts themselves are concealed. Venmo can link to a user’s Facebook account to send or request payments to and from their Facebook friends. Venmo is also mobile-only: although there is an option to log in through an internet browser, payments can only be sent or requested through the app. Venmo also offers debit and credit cards to allow users to access money in their Venmo accounts: debit cards can be used to withdraw money from MoneyPass ATMs and credit cards allow 3% cash back and also offer rewards.
2. Apple Pay: Apple Pay is a mobile payment service hosted by Apple that is only available on iOS. By storing a card on Apple Wallet (a built-in iPhone app), iPhone users can buy items right from their devices by entering their passcodes and double-tapping the power button on the right side of the devices. Although Apple Pay requires users to possess a debit or credit card beforehand, it eliminates the need for users to carry their cards with them. Apple Pay has a new feature called Pay Later, which enables users to make payments with Apple Pay, then tapping the Pay Later tab. Pay Later splits payments into four equal payments across six weeks (the date of the purchase, and then every two weeks thereafter). It is important to note that Pay Later can only be used for purchases between $75 and $1,000. Apple Pay has another feature called Apple Cash, which is essentially a digital debit card to which money can be added as desired. Apple Cash allows money to be sent or received to or from contacts through Messages, and a notification will be sent whenever the balance changes.
3. CashApp: CashApp is a mobile payment app similar to Venmo that allows users to transfer money to each other. Though it is linked to a bank account, users can add cash to their CashApp accounts separately. However, CashApp, unlike Venmo and Apple Pay, does not sync to a contact list or other social media account, so it is important to know the handles of the senders and recipients. CashApp also allows investing in stocks or Bitcoin directly from the app, as well as tax and financial planning. Like Venmo, CashApp offers a debit card that can be used to withdraw money at MoneyPass ATMs.
4. Zelle: Zelle is a mobile banking service that can be used to send money directly from a user’s bank account. As such, it does not require a card to be linked to it. Zelle can be used to send and receive money, and it can also split a payment across multiple recipients. It automatically syncs with a user’s phone or email contacts (that also use Zelle), so it is not necessary to connect another account to it or learn other users’ handles. Moreover, many U.S. banks have ported Zelle, so it does not matter what banks each party uses as long as their respective banks use Zelle.
5. Stripe: Stripe is a payment platform that is mainly used by businesses to accept payments and send payouts. It is used by many websites such as Quora to pay contributors, although, generally, balances below $10 cannot be withdrawn from Stripe. Stripe can be B2C (business-to-consumer) or B2B (business-to-business) and can be used for billing, invoicing, selling, and incorporating a company. However, people should not use Stripe to transfer money to each other due to the prohibitive cost and the fact that Stripe is meant to be used by businesses. However, Stripe does offer a mobile app from which money can be withdrawn.
Benefits and Drawbacks of E-Pay Platforms
As previously mentioned, e-pay platforms are very convenient as they reduce the need to carry cash and can be used almost anywhere for any reason. Many businesses, especially small businesses, accept payments through CashApp, Venmo, or other mobile payment apps. These may be especially prevalent at outdoor markets, where it is difficult to set up payment stations. Additionally, some brick-and-mortar stores accept payments and transfer rewards points through these apps. Some of these apps may also offer free transfer to users’ bank accounts, but the banks themselves may charge a fee for instant transfer: for example, Zelle itself does not have a fee for a transfer, but the banks that use Zelle may impose fees of their own. Venmo charges a 1.75% instant transfer fee, but if users select the option to transfer money within three business days, there is no fee. Not to mention the myriad of options available offers something for everyone depending on their needs or choices.
However, e-pay platforms are not without their drawbacks: their biggest weakness is that they are still not accepted everywhere. Therefore, customers should still have their cards or cash on hand just in case. Another glaring weakness of mobile payment is security issues: losing a device or downloading a virus or other malware poses a huge security threat, so it is important to consider device safety. Additionally, power outages or other technical issues will impede money transfers through these apps, and there are also privacy risks due to these apps’ record-keeping. Venmo, which requires descriptions of payments, recently instituted a rule that all fantasy sports buy-ins and payouts must be reported on a tax form depending on the amounts to comply with tax laws, so users need to make sure that they do not run afoul of reporting laws. Equally important is knowing recipients: payments sent through mobile apps cannot be cancelled, and until recently, Venmo did not require users to enter the last four digits of the recipient’s phone number, which caused a lot of erroneous payments. CashApp does not have any such security feature so far. Another danger with Venmo in particular is that it does not use a decimal point to automatically delimit payment amounts, so unless a user enters the decimal point themselves, 100.00 would appear as 10000. Therefore, it is important to keep a close eye on who is receiving money and how much is being sent.
Conclusion
Mobile payment apps have been a strong boon to customers and businesses alike by reducing the need to carry cash and by allowing small businesses to accept payments without the need for elaborate payment stations. However, it is important to note that no technology is perfect, and mobile payment apps are no exception. Due to the vulnerabilities that will always persist in technology and the fact that mobile payments are still not universally accepted, it is still important to carry cash or cards to make payments in case needed. Despite their imperfections, mobile payment apps have made great strides in ushering in the age of the future and offer convenience and efficiency to everyone.
