Snapchat's Snapcash: Is Peer-to-Peer Payment Safe?

Snapchat has partnered up with Square for a new feature, Snapcash, which allows its users to send and receive money on the app. It's as easy as sending selfies with Snapchat, but how safe is it?
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By Jessa Barron,

Do you need to pay a friend back for buying your movie ticket but won't see them for a while? Or maybe you want to send your nephew money for his birthday but fear the check would be lost in the mail? Snapchat has partnered up with Square for a new feature, Snapcash, which allows its users to send and receive money on the app. It's as easy as sending selfies with Snapchat, but how safe is it?

How Does Snapcash Work?

The first time you use Snapcash, it will prompt you to link a debit card to your account through Square, which means you will automatically become a Square user in the process. You must enter your card number, security code and billing zip code before you can send or receive money. Sending money on Snapchat is similar to sending messages on the app. The recipient will get a notification and must also link a debit card to their Snapcash account in order to receive the money. Once they link their card, the money will be deposited into their account. Unlike regular messages, money transaction messages will not disappear from your chat history in Snapchat. Once you send the cash, the recipient has 24 hours to link their debit card to claim the money. If they fail to do so, the money is refunded to the sender.

One of the disadvantages with Snapcash is that there's no way to cancel a transaction after you send it. That means if you send it to the wrong person or send the wrong amount, there's a chance that you may have created a major headache for yourself, especially since you'll have to go through Square to dispute it.

Is It Safe?

The only security feature that Snapchat has is a setting that requires you to enter your card's security code before each payment. With the history the app has with hackers, this doesn't seem like enough. However, Snapchat claims to only manage the message itself, leaving Square to control the financial aspect. This means Snapchat will not store any of your debit card information, as Square will encrypt it and submit it to their servers.

So can you trust Square with your financial information? Square is best known for giving small businesses a way to accept credit cards for payments, via a smartphone swiping device or tablets that function as cash registers (as you've seen on food trucks or in smaller boutiques and stores). While the company does have a long-standing history of securely storing information, it's always best to be skeptical of handing over your financial information.

We should also note that since Snapcash requires you to use a debit card instead of credit, you may be more financially vulnerable if Square is ever breached. This is because you'll be vulnerable to someone gaining access to all of your bank accounts connected to the card, instead of just one credit card account. Learn more about why credit is a better option than debit here.

What Are the Limitations?

Snapcash is currently only available to Snapchat users in the United States, who are at least 18 years old and who have a Visa or Mastercard debit card. There is also a limit on how much money can be sent and received. According to Snapchat, the limit on funds sent can be raised to up to $2,500 per week, and $1,000 per month for funds received.

The Snapcash feature is only available for peer-to-peer payments, which means that you cannot use it to make purchases from vendors. There are other options for peer-to-peer payment, like PayPal and the mobile app Venmo, but each has its own drawbacks, with security being the main worry. Most of these peer-to-peer payment apps and services like this store all of your information, so anyone who might gain access to your phone or computer could use your card to send themselves money and take you for everything you've got. Venmo also has a big social component, where it encourages you to share your transaction history in detail -- similar to Facebook's newsfeed, but with payments sent and received between friends. This may not be the type of information you want posted online for anyone to potentially see.

Should I Use It?

With Snapcash, the money is sent directly to your debit card and deposited in your account, regardless of which bank the other party uses and at no charge on either end. There is no login or password to remember (as long as you stay logged into Snapchat) and no special software required to use the service. But since Square and most of the other payment apps store your information, you may want to download a separate Internet security mobile app for security purposes. Many of these types of apps, such as ESET and BitDefender, offer special security features that make sure the apps you use are safe. BitDefender even has a feature you can activate which will prompt you to enter a PIN each time you access an app like Snapchat, giving you an additional layer of protection since no one can get into the app without the PIN.

As with most services online, you should always be wary of adding people you don't know to further protect yourself from identity fraud, and monitor your bank transactions daily. Visit our identity theft protection blog to learn other precautions you can take to protect yourself from identity theft.

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