Staying Informed: Payment Apps vs Banks

When it comes to options for managing money, there seems to be an ever-expanding selection for consumers. Peer-to-Peer (P2P) payment companies such as PayPal and Venmo are enhancing the features to their products, which can blur the lines between banking and other digital solutions. Here's a  are some ideas to consider regarding the capabilities of payment apps versus bank accounts.

Convenience

Payment apps gain much of their appeal from convenience. Helping to make things like splitting a bill more seamless by providing easy fund transfers among trusted contacts. The drawback is that many payment app balances aren't FDIC insured and don't accrue interest, making them convenient for on-the-go access but less suitable for long-term savings.

FDIC protection

Bank accounts, backed by the Federal Deposit Insurance Corporation (FDIC), offer up to $250,000 per depositor, per account in protection. Payment apps lack this insurance, leaving funds exposed in case of business failure, making bank accounts a safer option for safeguarding against loss.

Safety

While P2P apps employ many standard security measures, they aren't foolproof. If you fall victim to fraud, you could be responsible for the amount held in your account. Recommendations for keeping your money safe with P2P apps include only sharing money with trusted entities, and maintaining a low balance. To minimize risk, customers should promptly transfer large balances to a linked bank account or credit card. 

Proximity to assistance

Many payment apps just provide a 1-800 number for support, but banks like Sunflower Bank offer customers the same opportunity to contact them while also fostering relationships with customers in their communities. Our employees live in the same communities as our customers and take pride in the relationships we build within them through community involvement efforts and outstanding service. We strive to be a financial partner with all of our account holders and other community members as well.

Account features

Bank accounts offer different levels of ownership and access. For example, some might offer a custodial account for children, a joint account with a spouse, or the opportunity be a signer on a parent’s account. Bank accounts can earn interest, offer overdraft protection, and be used for writing checks to pay anyone, including individuals and businesses not set up to accept electronic payments. Additionally, many bank accounts interface with online banking and automatic payments to offer some of the same convenience you'll find with payment apps.

PayPal and Venmo are excellent at transferring funds quickly to trusted recipients. They do not have the same capabilities as bank accounts. Think of apps like a prepaid card—something that is readily available to use occasionally, but not designed for holding large balances for long periods of time. While some might offer varying features that can be helpful for users, the access, control, and protection that you get with a bank account is unmatched.

Payment apps and bank accounts each have different features that serve different needs and there are benefits and limitations to both. Using each service for its intended purpose is the smartest way to maximize your money and continue Creating Possibility for your financial future. Please contact us to let us know how we can help you reach your financial goals.