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Digital Wallets Are Here to Stay

Can you trust the technology behind apps like Venmo and Zelle?

Digital wallets VENMO vs. Zelle
Venmo and Zelle are among the increasingly popular digital wallet apps that allow you to send and receive payments.
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A few months ago, I organized a gift (from 30 women) for a friend’s big birthday. So 
I sent an email with the amount owed and my address. Five minutes later, a woman emailed back: “Can I Venmo you?”

Could she? I’d never used the mobile-payment service, but my kids do.
 I downloaded the app, opened an account (in 
no time at all) and sent a second email: “Or, if you’d prefer, you can Venmo me.” I still received checks and cash, but most went the electronic route — and collecting from a large group was never easier.

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Venmo is a cash-transferring system sometimes called a digital wallet; it’s owned by PayPal. According to research from Finder.com, 43 percent of Americans have used a digital wallet in the past year. And those numbers will likely grow with the recent launch of Zelle, from bank-owned Early Warning Services.

Are the systems safe? Generally, yes. Both use state-of-the-art tool s
and encryption to keep your data — and cash transfers — secure. The drawback? Consumers generally spend more money overall with digital wallets than they do with credit cards, debit cards or cash, says the Finder.com study.

Venmo vs. Zelle

The Platform

Venmo: Operates through the Venmo app you download to your mobile device.

Zelle: Operates through apps of participating banks and credit unions.

 

How it Works

Venmo: Transferring is easiest if both parties are
on the app. You can “request” or “pay” other users and add
 a note or emoji as the transaction description. You can also send money to family and friends in the U.S. using their cellphone number or email.

Zelle: Users who have accounts at a participating bank can send money to anyone for whom they have a cellphone number or email address. Recipients who don’t bank with Zelle partners can claim their money by signing up at clearxchange.com.

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Speed

Venmo: When you “cash
out” the money that friends have paid into your Venmo account, it typically takes 1 to 3 business days to receive your dough.

Zelle: You get your money in minutes (except for the first time; it can take 1 to 3 business days after registration to receive your first payment).

 

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Cost

Venmo: Bank transfers and debit card payments: free. Credit card transactions: 3 percent.

Zelle: Partner banks have the right to charge 
a fee for the service, but so far none have done so.

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