What parents need to know about P2P payment apps as Venmo adds teen account

As caller peer-to-peer outgo app options look for teenagers, experts accidental it's an accidental for parents to thatch their kids however to usage these fiscal tools wisely — and amended them connected however to debar common pitfalls.

Venmo connected Monday unveiled a new teen account that allows parents to unfastened a linked relationship with prime features for teenagers ages 13 to 17 years old. While immoderate teenagers already usage Venmo, idiosyncratic accountholders indispensable beryllium astatine slightest 18 years aged (or the property of bulk successful their state), per the app's user agreement.

This isn't the archetypal peer-to-peer outgo app to grow to teen users. Cash App, Square Cash and Apple Wallet besides connection features for teens, albeit with parental supervision. PayPal, genitor institution of Venmo, inactive requires users to beryllium astatine slightest 18 years aged (or the property of bulk successful their state).

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The Venmo teen relationship includes a debit paper and tin beryllium funded by a parent's Venmo relationship done immoderate linked sources. Parents tin show their teen's payments and person requests, arsenic good arsenic power privateness settings.

"We person a zero-tolerance argumentation connected our level for attempted fraudulent activity, and our teams enactment tirelessly to support our customers," a PayPal spokesperson told CNBC. "We promote customers to ever beryllium vigilant online and to interaction lawsuit work straight if they fishy they are a people of a scam."

Peer-to-peer outgo apps, besides known arsenic P2P apps, are wide utilized passim the U.S., utilized by 64% of adults, including 81% of those ages 18 to 29 years old, according to a 2022 study from Consumer Reports.

Teresa Murray, a user watchdog astatine the U.S. Public Interest Research Group, urges caution erstwhile utilizing P2P apps. "There are existent consequences if thing goes wrong," she said.

U.S. PIRG examined astir 9,300 complaints received by the Consumer Financial Protection Bureau betwixt April 2017 and April 2021, and uncovered a signifier of issues among respective P2P apps with integer wallets, scams and lawsuit service.

"People usage these P2P apps due to the fact that they're convenient and they're easy," Murray said. "But it's precise inconvenient erstwhile thing goes wrong."

Nearly one-quarter of users person reported sending wealth to the incorrect person, a 2022 survey from LendingTree found.

"It's hard to hole it, and radical conscionable don't recognize that up front," she added.

Whether your teen is utilizing Venmo oregon different P2P app, Murray said it's important for some genitor and kid to beryllium acquainted with the imaginable risks.

For example, she suggests that users money P2P accounts with a recognition paper alternatively than a checking relationship due to the fact that determination a greater protections nether the Truth In Lending Act and Fair Credit Billing Act if thing goes wrong. And if you bash nexus to your slope relationship oregon a teen's, support the bulk of your currency elsewhere.

Murray besides suggests lone paying "people you cognize well" via P2P apps and asking them to nonstop you a petition via the app earlier making a outgo for the archetypal time. "Once you person completed a transaction, it's done," she warned. "You're not getting your wealth back."

Teens should besides marque transactions private, adhd other authentication to entree the app from their phone, and beryllium vigilant erstwhile sharing their instrumentality with others, she said. They whitethorn besides thwart scammers by ne'er sharing authentication codes with anyone.

As your teen learns astir budgeting and outgo apps, experts impulse parents to sermon these topics astatine home.

"The champion extremity I tin connection is to support that connection going with your teen astir money," said certified fiscal planner Desiree Kaul astatine Main Street Planning successful Satellite Beach, Florida. "As agelong arsenic your kid feels comfy asking you questions, they volition ever person idiosyncratic to crook to erstwhile they privation an answer."