The do’s and don’ts of payment apps

You could say once your company becomes a verb, you’ve arrived. And “Venmo me” is a pretty common phrase these days.

Mobile payment apps like Venmo, along with Zelle and Cash App, are becoming pretty widespread, especially among young people. According to the Federal Reserve Bank of Atlanta, consumers under the age of 25 were twice as likely to have used some kind of mobile payment app compared to older Americans.

But as with any form of money, there is etiquette about how to use them.

Marketplace’s Stephanie Hughes spoke with Yanely Espinal, host of Marketplace’s “Financially Inclined,” a video podcast that provides money lessons for teens, about the do’s and don’ts of these payment apps.

The following is an edited transcript of their conversation.

Yanely Espinal: So actually, the biggest “do” is to make sure that you talk about these things before you go, like, requesting or sending money. You just want to have some type of communication before the transaction is made. I didn’t really know there was a term for this, but I spoke to Erin Lowry. She’s the author of the “Broke Millennial” book series, and she talked a lot about this, which is called Venmo etiquette:

Erin Lowry: If you’re inviting somebody to do something and your expectation is that they are going to pay for some half, whatever amount, tell them that early, be sure to communicate that. It is really tacky to after the fact, without communicating that, send a Venmo request for a sum of money.

Stephanie Hughes: Got it, kind of intense if you were like, “Hey, these baseball tickets cost this much, and you owe me this much money.”

Espinal: Right. It can kind of create awkward social dynamics in your relationships. So I think that it’s a good point. You just talk about this stuff beforehand, like, before you leave to go to lunch, like, “Oh, hey guys, I’d rather it be awkward now than later. Like, let’s just settle this real quick. How are we gonna pay for this? Like, I’m cool if we split it, but I just wanna make sure.” Or “I’m not cool with splitting, so I’d rather not. Just let me know now if we want to ask for separate tabs.” You know, that quick communication could get rid of a lot of awkward tension and help you not ruin relationships.

Hughes: What happens if it does get awkward later? Like, if you’ve talked about it beforehand, you’re gonna split something and then a friend ghosts you on a payment.

Espinal: Yeah, that’s definitely common. The thing to remember here is that this is technology that was designed as an interface to help you utilize the banking services that you’re used to using, and make that easier for you with tech. A lot of times, the transaction will say “pending.” So like, if you log into your cash app and you sent somebody a request a couple of days or a week ago, it’ll still be at the very top as pending. So it’s just kind of like a reminder for you, so in case you might forget, or so that you don’t forget, and then if it expires, it’ll show you, “Hey, this payment request expired, you can send it again.” Now, at that point, I would say you should probably communicate outside of these apps. Also, again, to Erin’s point, send a quick text, like, “Hey, don’t know if you missed my request, but I went ahead and sent it again. I noticed it expired. Let me know if you want to chat about that.”

Hughes: I understand some people use their digital payment accounts to store money, like, keep it there, almost like a bank account. Tell me about that.

Espinal: Yeah. I would say this is probably the biggest thing that I would raise as a red flag for the kinds of behaviors and the common way that these apps are used among younger consumers. If you’re storing money in your Venmo wallet or your Cash App wallet, that money is not actually FDIC [Federal Deposit Insurance Corp.] insured. It’s not protected by the government, and these technology companies are not chartered as banks, and so they therefore do not have to follow financial and banking regulations. Now, sometimes they’ll have some features that will say, like, “Oh, you can get pass-through FDIC insurance if you sign up for direct deposit with us and set up your savings feature, or get a Cash App card or a Venmo card. And if you get those cards, then you qualify.” So this is the really important piece for young people, if you’re listening, or if you have young people in your life that you really care about: Make sure that they’re not in the habit of leaving hundreds of dollars or, oh, gosh, potentially thousands of dollars just sitting in that wallet, not insured, not protected. And even if they do have pass-through insurance or protection, meaning that they did sign up for direct deposit, the problem is even then, you’re still not really protected against the failure of that tech company, only the bank holding your money.

Hughes: Emoji are big on some of these apps. Are there any go-to emojis that the kids are using these days? I’m particularly interested in codes, like, if there’s something that means something else,

Espinal: I mean, I think that the more creative, the better. I saw one the other day that was, like, the crown and a bumble bee. And I’m like, “Oh, somebody got Beyonce tickets.” So if you know, you know. You know? Like, that’s the vibe right now, is like, if you know, you know. But a lot of them are, they’re funny, like, you start to put it together, like, “Oh, I see what this is.” It’s like a little bit of a riddle. And so I think the more creative emoji combinations are the ones that they try to do in a way where it’s not necessarily obvious, it might be an inside joke, or maybe you put two and two together and then you get a chuckle. But I don’t know if there’s any immediate ones that pop up, or everybody’s using, except for the obvious ones, like a pizza slice.

More on this

The internet has a number of articles about Venmo etiquette. This 2019 piece from Money explores whether it’s OK to send cash over Venmo as a wedding gift.

Lizzie Post, Emily Post’s great-great-granddaughter, is quoted in the article. She said that giving cash is totally OK, but that it should be sent in the form of a check, with a nice note, not as a digital payment.

I just think about all the emoji you’d have to use to get that message across. It’d be at least a dancing figure, the champagne glasses and the happy face with the hat and the little party horn.

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