INDIANAPOLIS — People use payment apps a lot. That is because convenience is the key ingredient.
The Consumer Financial Protection Bureau estimates that in the year 2022, we passed around $893 billion dollars across all service providers.
That's why the group is now warning users that the apps may lack protection.
Chanelle Bessette with NerdWallet said it's important to keep in mind that these apps are not bank accounts.
"They are not FDIC insured," Bessette said. "If they go under, then that means your money could potentially not be protected."
The good news is the remedy is easy.
"Transferring [the money] to a bank account after you receive it is a really good idea," Bessette said.
The CFPB says if the non-bank payment app fails, "your money is likely lost or tied up in a long bankruptcy process."
When you go to transfer money, you may notice two options. The instant transfer charges a fee, while the 1-3 day transfer does not.
Bessette said the free 1-3 day transfer is fine. The CFPB just does not want people treating the apps like an extra checking or savings account.
If you are the person sending money to others, triple check you have the right recipient. Because if you make a mistake, the money is likely gone forever.
"You're dealing with cash. It's much harder to track down where that cash has ended up," Bessette said.
It's all about making sure your money stays in the right hands.