Digital Payment Apps Offer Perks, Convenience… and Security Risks
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Here's your money briefing for Friday, August 11th. I'm J.R. Whelan for The Wall Street Journal. Digital payment apps can make checking out a breeze. But while they offer consumers convenience, some offer an opportunity for scammers.
The advice here is similar to when to link your bank account directly, and that's to only use those payment apps with people that you know and trust.
We'll talk to WSJ personal finance reporter Imani Moise about ways to protect your money after the break.
This podcast is brought to you by ReliaQuest. Cyber criminals are constantly attacking. They want your data. They want your identity. They want your innovation. ReliaQuest fortifies your business with agentic defense, AI that detects, contains, and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest, agentic defense for the enterprise. Learn more at ReliaQuest.com. That's R-E-L-I-A-Q-U-E-S-T.com.
When it's time to check out, be it online or in line at a store, consumers have many options. And each of those options come with perks and the risk of being the target of fraudsters. WSJ personal finance reporter Amani Moiz explored the pros and cons of popular payment methods and joins me now. So Amani, let's start with credit cards. For a lot of people, plastic has long been the most convenient method of payment.
What convenience and security trade-offs do digital payment apps introduce?
But what do people need to weigh against that convenience?
Interest rates. So credit card interest rates have recently hit record highs and they're only climbing higher. If you don't have the money to pay off your balance right away, you should consider cheaper options because regardless of how many travel points or cash back deals you're offered, chances are the interest charges are going to outweigh those benefits. Debit could be a better option. And even though debit cards don't typically have all the rewards associated with the credit cards, they have a lot of the same protections. So if there's an unauthorized transaction, it's really easy to get your money back. And even if you purchase something online with a debit card and it never arrives or it's not as described, there's a good chance of getting your money back as well.
Now, if you don't have the money in your account or you want a little bit more time to pay, you should consider buy now, pay later options because they often don't have the same interest rates associated with credit cards.
And pay your bills at the end of the month, and you can avoid those extra charges, right?
Yes. As long as you pay off your balance in full, interest isn't a concern.
Now, digital wallets like PayPal or Apple Pay, they're also pretty easy to use. But are they considered safe?
Definitely. All of the protections associated with the underlying cards that you're using in your wallet are still in effect. And as a matter of fact, these wallets might be even safer because a lot of them offer tokenization, which means they're not actually sharing your card information with merchants.
Does it make a digital wallet safer if you tie it to your credit card?
Generally, yes, because most digital wallets like Apple Pay and Google Pay generally don't offer additional protections on top of whatever underlying payment mechanism that you're using. However, PayPal does offer purchase protection. In general, it's always important to read the fine print associated with the wallet if you're going to experiment with different payment styles.
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