Released: October 07, 2024

Here’s what you need to know with popular payment apps

Source: Hannah Ziegler, Washington Post (Paid Registration)

Almost three-quarters of U.S. consumers used payment accounts such as PayPal, Venmo and Cash App in 2023. The CFPB and other watchdogs say it’s often unclear if such money is insured against risky investments or fraud.

User agreements for digital payment apps need to do a better job of clarifying where funds are being held and explaining under what conditions they may be insured, and what would happen if the parent company fails, watchdogs say.

The CFPB proposed a rule in 2023 that would require non-bank financial companies handling more than 5 million transactions a year — including many digital payment apps — to follow the same rules as traditional banks and credit unions, such as capital requirements and investment restrictions.

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