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Global newsletter: Digital payment apps are not savings accounts

Global newsletter: Digital payment apps are not savings accounts

PayPal and Venmo Accepted Here sticker is seen at the entrance to a Panda Express restaurant in Sherwood, Oregon.

The following is an excerpt from today’s Global Newsletter.

If you like to store deposits in digital payment apps, you may want to rethink that strategy.

The Washington Post (soft paywall) had a story yesterday that warned consumers that there is no insurance on those funds, and they may be at risk.

“Popular digital payment apps are increasingly used as substitutes for a traditional bank or credit union account but lack the same protections to ensure that funds are safe,” Consumer Financial Protection Bureau Director Rohit Chopra said in a news release Thursday.

Most people likely assume their funds are kept in a traditional bank to be drawn upon when transacted because — let’s be honest — no one reads the terms and conditions. Perhaps instead of speed-scrolling through the mountain of text to activate the “I agree” button, we should be more diligent about informing ourselves before signing in virtual blood.

It’s a good practice to link bank accounts and move balances back and forth as needed on a regular basis. It’s a small burden in exchange for the ease of transfer the apps bring.

Kiev, Ukraine - June 27, 2014: Person with credit card in hand looking on a brand new Apple iPad Air with Paypal website on a screen. Paypal is the worldwide e-commerce business service allowing payments and money transfers via internet, founded in June, 1998.

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