Protect Your Money: Safe Bill Payment Alternatives to Popular Payment Apps

Consumers, especially young adults, use payment apps frequently. According to a March 2022 survey by Consumer Reports, 85 percent of consumers aged 18 to 29 have used one of these apps. They are easy, convenient, and seem safe, but the Consumer Finance Protection Bureau reminds individuals that funds stored in a payment app like Venmo, PayPal, or Cash App are not insured. If consumers use these apps to pay their bills and the payment app company fails, they may very well lose their money. Other risks are also present.

Payment apps may seem to be the same as a bank account, but they are not. The non-bank companies that offer the apps invest the money deposited with them–without paying the consumers any interest. Investment losses, interest rate changes, currency exchange rates, or other issues can lead the payment app company to lose money or even collapse. What happens to the funds in such scenarios remains uncertain.

Payment apps help avoid the hassles associated with online bill-paying, such as logging into multiple accounts and navigating each company's payment process. However, they differ significantly from paying utility and other bills directly from a bank account. Cubby Paperless offers consumers another way to review documents and pay bills safely, removing much of the typical hassle that drives people to use payment apps in the first place. 

Why Do Payment Apps Appeal Young Adults?

Convenience stands at the forefront of why young adults flock to payment apps. As digital natives growing up with technology, they appreciate the seamless experience of transferring money with just a few taps. Payment apps also offer the flexibility of splitting bills and reimbursing friends easily, which resonates with the social habits of young adults.

We can't overlook security and trustworthiness, either. Despite concerns, many young adults feel more comfortable using payment apps over traditional methods. The digital-first approach aligns with their trust in technology and preference for managing finances effortlessly. It’s only natural for them to prefer a payment app to pay their bills.

Payment App Risks

The major risk associated with using payment apps is the lack of deposit insurance. If the payment app company fails, users could lose all the money stored in their app accounts. Money received through one of these apps typically remains in the app until the consumers transfer it to their bank accounts, putting these funds at risk in the interim.

Another significant risk is the potential for fraud and scams. Cybercriminals who use phishing schemes, fake profiles, and other tactics to trick users into sending money or revealing sensitive information often target payment apps. Once consumers send money through these apps, it is typically difficult to recover. Paying a falsified bill with a payment app leaves the consumer with little chance of getting their money back.

Transaction errors are also risks. Payment apps rely on user input to send money. Mistakes such as entering the wrong recipient information or amount can send funds to the wrong place. These errors can be challenging and time-consuming to correct. Billers are unlikely to waive late charges that occur when a consumer mistakenly configures the payment transaction.

Payment apps often charge fees for certain transactions, such as instant transfers or payments made with credit cards. If consumers need to pay bills immediately to avoid late charges, these fees can add up over time, making the convenience of using the app more costly than expected.

A Safer Bill-Paying Alternative

With Cubby Paperless, consumers can easily review bills for accuracy then click on a link to the biller’s payment portal, allowing for funds to be transferred directly from consumer bank accounts insured by the FDIC. Cubby is not a bill-paying service and doesn’t store funds or have access to consumer bank account information.

With Cubby Paperless, consumers can easily review and manage all their billing documents in one centralized location. This reduces the likelihood of missing payments or duplicating them, which can occur when using multiple payment apps.

With Cubby Paperless, consumers get the benefit of streamlined bill review and payment, without the risk that can come from payment apps.