The battle for your digital wallet rages on

What do bank-enabled digital wallets mean for Fintech

What does the war on your wallet mean to you?

“The promotion for consumers is an easier online payment experience,” Rossmann said. You will not need to enter all of your card information because it will already be saved in the system.

“And it will be managed by banks, which in theory will have better protection against fraud than retailers.”

The good news is, “they’re really a regulated sector,” added Pam Dixon, executive director of the Global Privacy Forum, a nonprofit research group.

However, Dixon cautioned that “consumers still have to be really careful.” This is your financial information.

Digital Payments Are Growing In Popularity, But Are They Safe?

During the pandemic, shoppers have shown an increased preference for cashless transactions and still do: Peer-to-peer payment applications Known as P2P-like Zelle and Paypal’s Venmo, which allow users to store their banking information on their smartphones, has exploded in popularity.

Now, 64% of Americans use peer-to-peer payment apps, though that percentage jumps to 81% for adults, according to a March 2022 Consumer Reports poll.

Nearly 40% of the more than 2,000 people surveyed said they use payment apps at least once a month, while 18% use them at least once a week.

Digital payments are generally more secure than credit card transactions because there is a biometric component — “this online solution probably has some kind of two-factor authentication, like a code sent via text message,” Rossman said.

Plaid CEO Zach Perret discusses the digital wallet race and transformation within fintech

But it is not without risks. Consumer Reports analysis found that users are vulnerable to fraud, fraud, or can lose money if they accidentally send a payment to the wrong person.

And peer-to-peer payments still have varying degrees of consumer protection, which can cause a problem when it comes to refunds.

Trying to get money back into your personal account after it’s been transferred to someone else can take a little more work than requesting a refund from a credit card company, which often reverses charges almost immediately and fights on your behalf.

“It’s kind of like putting toothpaste back in the tube,” said Rossman.

“Let the buyer beware”

Zelle, in particular, has been the subject of criticism recently. US Senate report It stated last fall that “Zelle is rife with fraud and theft, and few customers are being refunded — potentially violating federal laws and consumer rules.”

Consumer Reports analysis included the call for policy makers to strengthen consumer protection. “There is a gap between the protections available to consumers and the latest technology for payments,” said Delicia Hand, director of financial equity for Consumer Reports.

Meanwhile, “payment service providers can raise the level of consumer protection by taking more stringent steps to reduce user risk,” Hand added.

If you haven’t used a digital wallet before, make sure you do a few test runs and don’t send large amounts.

Pam Dixon

Executive Director of the Global Privacy Forum

Contrary to those findings, “99.9% of the 5 billion transactions processed on the Zelle network in the past five years were sent without any report of fraud or fraud,” the American Bankers Association, Banking Policy Institute, Consumer Bankers Association and The Clearing House said in a statement. Mutual.

In every case in which a customer objects to a transaction made through Zelle, banks are obligated under federal law to investigate and provide compensation if the transaction was unauthorized, the statement said.

For now, Dixon offers consumers this advice: “Let the buyer beware.”

“If you haven’t used a digital wallet before, make sure you do a few test runs and don’t send large amounts.”

He also advised adjusting privacy settings to reduce the amount of information companies collect.

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