mascot | mascot | Getty Images
As new peer-to-peer payment app options emerge for teens, experts say this is an opportunity for parents to teach their kids how to use these financial tools wisely — and educate on how to avoid common pitfalls.
Venmo on Monday unveiled a new teen account which allows parents to open a linked account with certain features for teenagers aged 13-17. While some teens are already using Venmo, individual account holders must be at least 18 years old (or the age of majority in their state), depending on the app. User Agreement.
It’s not the first peer-to-peer payment app to expand to teenage users. Cash App, Square Cash, and Apple Wallet also offer features for teens, but with parental guidance. PayPalVenmo’s parent company, still requires users to be at least 18 years old (or the age of majority in their state).
Learn more about personal finance:
How to Capture Higher Savings Returns 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 includes a debit card and can be funded by a parent’s Venmo account through any linked source. Parents can monitor their teen’s payments and friend requests, as well as control privacy settings.
Apps are ‘hands-on’, but problems can be ‘hard to fix’
Peer-to-peer payment apps, also known as P2P apps, are widely used in the United States, used by 64% of adults, including 81% of 18-29 year olds, according to a 2022 report by consumer reports.
Teresa Murray, a consumer watchdog at the US Public Interest Research Group, advises caution when using P2P apps. “There are real consequences if something goes wrong,” she said.
US PIRG reviewed nearly 9,300 complaints received by the Consumer Financial Protection Bureau between April 2017 and April 2021, and discovered a pattern of issues among several P2P apps with digital wallets, scams and customer service.
“People use these P2P apps because they’re convenient and easy,” Murray said. “But it’s very embarrassing when something goes wrong.”
“It’s hard to fix, and people just don’t realize it,” she added.
Nearly a quarter of users said they sent money to the wrong person, a Survey 2022 of LendingTree found, while 15% were victims of scams.
“We have a zero-tolerance policy on our platform for attempted fraudulent activity, and our teams work tirelessly to protect our customers,” a PayPal spokesperson told CNBC. “We encourage customers to always be vigilant online and to contact customer service directly if they suspect they are the target of a scam.”
Protecting Teenagers From Common P2P Payment Problems
Whether your teen is using Venmo or another P2P app, Murray said it’s important that both parent and child are familiar with the possible risks.
For example, she suggests that users fund P2P accounts with a credit card rather than a checking account, as there is greater protection under the Truth In Lending Act and Fair Credit Billing Act if something is wrong. And if you’re linking to your bank account or a teenager’s bank account, keep the majority of your money somewhere else.
Murray also suggests only paying “people you know well” through P2P apps and asking them to send you a request through the app before making a first payment. “Once you’ve completed a transaction, it’s done,” she warned. “You don’t get your money back.”
Teens also need to make transactions private, add extra authentication to access the app from their phone, and be vigilant when sharing their device with others, she said. They can also thwart scammers by never sharing passcodes with anyone.
Talk to your teens about money
As your teen learns about budgeting and payment apps, experts urge parents to discuss these topics at home.
“The best advice I can offer is to keep that communication going with your teen about money,” said Desiree Kaul, certified financial planner with Main Street Planning in Satellite Beach, Florida. “As long as your child feels comfortable asking you questions, they will always have someone to turn to when they want an answer.”
[colabot2]
Source link