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How to keep your money safe with Cash App and 5 ways to protect yourself from scams

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cash app graphicCash App provides several security features, like Venmo and PayPal, but falls short in some areas when compared to a traditional bank account.

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  • Cash App is relatively safe due to its encrypted transactions, security features, and protections.
  • You should enable the app’s security features and watch for scams or fraudulent transactions.  
  • Cash App isn’t a replacement for a bank account as your balance isn’t federally insured.

Cash App is one of several popular peer-to-peer transaction services, similar in many ways to PayPal, Venmo, and others. 

Cash App tries to differentiate itself from other apps by serving as a potential alternative to a traditional bank account; it can even receive direct deposits, for example.

The app is simple to set up and use, but you might wonder: Is Cash App safe and secure enough for regular use?

Cash App is relatively safe to use

Like Cash App’s peers, it’s a relatively safe way to pay for products and send money to friends, family, and co-workers.

Cash App encrypts all data in transit and can claim PCI-DSS level 1 certification — the highest level of compliance with a set of standards designed to ensure companies store, transmit, and process credit card data to the highest standards. The app also offers fraud protection for unauthorized charges. 

Cash App also features security built into the app to prevent unauthorized users from gaining access to the app if they should get physical possession of your phone; these include Touch ID and PIN code security, depending upon which phone you have. 

Even so, the weakest link in Cash App is often the user, so you need to be vigilant. “Cash App payments are instant and cannot be canceled,” said tech expert and media personality Kim Komando. “If something goes wrong, such as you sent it to the wrong John Smith in your contacts, then hopefully that person is honest and sends it back to you. But there has been a surge of payment app scams. More people are using Cash App and scammers are getting very bold.”

It’s worth noting, though, that Cash App positions itself as a possible alternative to a traditional bank account, but this is an area in which its safety is lacking; your balance is not FDIC insured.  “This could be a big problem if the company is hacked, if it were to go out of business, or if it were to experience some other catastrophe,” said Ted Rossman, senior industry analyst at Bankrate.com.

Quick tip: Another key thing you can do to help keep your data safe is to make sure that your devices are up to date. Here’s how to update an iPhone, Android, Mac, or PC.

Advantages of Cash App

You might start using Cash App because your group of friends, family or colleagues is already using it; alternatively, you might be interested in using it on your own. Regardless of what brings you to Cash App, there are many reasons to be attracted to this app:

  • In addition to simple peer-to-peer cash transfers, you can use Cash App as a bank account. Cash App gives you a routing and account number to enable direct deposits, so your paycheck can be sent directly to Cash App. Likewise, you can make payments from Cash App.
  • A debit card is available for making purchases at brick-and-mortar stores using your Cash App account. 
  • There are no fees for making payments when you connect Cash App to a bank account or debit card.  
  • If you are so inclined, you can invest in both stocks and cryptocurrency using your Cash App account. 
  • Cash App transactions are encrypted and safe.

Quick tip: If you’re going to set up an account, here’s how to start sending money with Cash App

Disadvantages of Cash App

While Cash App can take the place of a traditional bank account, you should be aware of the service’s primary shortcomings:

  • First and foremost, money held in your Cash App account is not FDIC insured, which means that your entire balance is vulnerable if Cash App were to lose your money or shut down unexpectedly. 
  • Unlike traditional bank accounts, Cash App balances do not earn interest. 
  • If you use a credit card to make a transaction, you’re charged a 3% fee. 
  • Cash App’s debit card can be used at ATMs, though there is a $2 transaction fee. 
  • There are some limits on Cash App transactions – you can only withdraw up to $310 per transaction from an ATM, for example, and no more than $1,000 in a seven-day period. 

Tips for protecting yourself on Cash App

Like many banking and payment services, Cash App is relatively safe as long as you are careful, stay vigilant for potential fraud and scams, and follow basic security best practices.

Here are some ways to protect yourself when using Cash App.

  • Enable security features in the app. Tap your profile icon on Cash App’s home screen, select Privacy & Security, toggle on the Security Lock button, and enter a PIN or enable a Touch ID, depending on your device. 
  • Don’t store large amounts of money. Again, your balance in the app is not federally insured, so it’s best to not use it as a bank account substitute. 
  • Only send money to users you know and trust. Don’t send money to accounts you don’t know personally, and make sure to verify the account information of your recipients.
  • Be aware of potential transaction scams. Cash App warns its users against several common forms of transaction scams that involve scammers promising money, goods, or services in return for Cash App payments. 
  • Watch out for customer support scams. You won’t ever be contacted by Cash App technical support or customer service. “Since Cash App does not provide a direct line to customer care, scammers impersonate them to obtain access to mobile devices and steal personal details,” said Chris Taylor, the marketing director at Profit Guru.

Cash App and taxes

If you use Cash App as part of your business, you’ll have to report those earnings for goods and services if those come to $600 or more. 

Cash App is required to provide you with IRS form 1099-K in those cases. That will show your total annual earnings via the app and the IRS will then be aware of those earnings — so you’ll have to pay taxes on them, as you would with any other earnings.

Cash App doesn’t have to report transactions for personal accounts.

How Cash App protections compare to other payment apps

Cash App has a lot in common with other peer-to-peer payment services like PayPal, Venmo, and Zelle. They all allow you to easily send payments to friends, family, colleagues, and businesses, and none of them charge fees when you’re using a payment source other than a credit card. In addition, they’re all highly secure with encryption to protect your transaction and various security tools like Face or Touch ID and PIN codes to prevent other people from gaining access. 

However, there are significant differences in how Cash App works compared to these other apps, specifically regarding how money in your account is protected and insured. 

  • Fraud protection: Cash App and Zelle do not offer fraud protection for authorized payments. While you can file a claim on Cash App for purchases which you can prove you did not authorize, if you don’t receive the goods on an authorized payment, you don’t have recourse like you do with PayPal and Venmo. 
  • FDIC insurance: Cash App positions itself as a bank account alternative, though your balance isn’t federally insured. In fact, no non-bank entity (including Venmo and PayPal) will be covered by FDIC insurance. But as long as your money stays in your linked (covered) bank account, you’re golden. The one notable app here is Zelle, because it doesn’t allow you to store money in the app itself, so your money is never in a non-FDIC insured account.

Here’s a quick overview of the various apps to help you weigh your options:

 

Cash App

PayPal

Venmo

Zelle

Encrypted?

Yes

Yes

Yes

Yes

Security features

PIN entry, Touch ID, or Face ID verification

Unique one-time pin for each login attempt; key pinning

Ability to add a PIN to your account

Facial or fingerprint recognition (depending on device) for logins; doesn’t require you to share any sensitive account details for transactions

Fraud protection for authorized payments?

No

Yes

Yes

No

FDIC insured?

No

No

No

Yes (in effect)

How to contact Cash App customer service

If you need to contact Cash App support, you can do so through the app, on the website, or by phone. You can also contact them via their various official social media accounts, such as Twitter, Instagram, Facebook, and TikTok.

Read the original article on Business Insider
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