ARTICLE: One Step Ahead: Welcome to the Digital Wallet Era

One Step Ahead: Welcome to the Digital Wallet Era

There’s a new verb in town: Venmo. As in, “If you pick up the lunch check, I’ll Venmo you my half.”

Venmo is one of the most popular ways to digitally send money to a friend or even shop with. It’s a free app that you download to your smart phone and link a bank account to. Add your avatar, create a username, and you’re ready to go! Person-to-person transfers are free; the receiver pays a small fee for commercial transactions.

Digital payments are growing in popularity. Here’s what you need to know about this app-based option.

The benefits of digital payments.
Spontaneity. With a digital wallet, you’re spending is no longer limited to having cash in your pocket or access to your checkbook. As long as your phone is in hand, you can transfer money on the spot. You can stop at that estate sale you happened to pass by and pick up that quilt or tool set that caught your eye. Or join the team for lunch even though you left your wallet at home, knowing you can immediately pay back the teammate who covers your bill.

Connectivity. If you have kids or grandkids, chances are they’re using a digital wallet on a near-daily basis. Much like social media, Venmo provides and even encourages you to add a message and emoji to your transfer—likely with gen-Z in mind. A college student would be thrilled to see a message from you pop up showing a pepperoni pizza and $25. Imagine celebrating the big win with your long-distance soccer champ by sending a trophy emoji and a little spending money. With a digital transfer, you’re communicating with them in their language.

Convenience. Digital payment options are real-time. They’re convenient—even becoming indispensable—for a society that continues to move away from carrying cash. And they’re a great way to send money to younger generations who’ve embraced digital money transfers. In short, digital payment options provide an easy way to access and transfer money.

The downsides to digital payments.
Limited. Digital transfers require both people to be users, so both you and your recipient must be comfortable with the technology required. Whereas you can tuck cash into a card or hand over a check to most anyone, digital transfers won’t work for every situation.

Mistakes. Mis-sending money is another downside. If you digitally send money to the wrong person, you’re often limited to their good faith to send it back. For a first-time transfer, it’s a good idea to send a small test amount first to make sure you’re reaching the right person. Another option is to use the last four digits of the recipient’s phone number to confirm their identity—there’s usually a prompt for this on a first-time transfer. After that first successful transfer, you’ll know you have the right person in your contacts.

“Free.” While the notification of a transfer to your recipient is immediate, the actual transfer of money is not. There’s usually an option for the recipient to pay a small fee for an immediate transfer into their bank account or they have to wait one to three days to receive the money.

Impersonal. Much like social media itself, a digital transfer is definitely a less personal way to interact. For a quick reimbursement to a friend or a spontaneous gift, a digital transfer can be a great option. But for some occasions, your handwritten card with a check or cash inside is still the best way to send a monetary gift.

Privacy. Part of Venmo’s allure to younger generations is the social aspect. Transfers are listed and generally available for all app users to see UNLESS you set your account to private. Of note, there is also a setting that allows “friends” (sender, recipient, and their Venmo friends) to share transaction information. And, like anything digital, once anything is “out in the wild” of the internet, you relinquish some amount of control and rely on someone else’s cybersecurity practices.

In short, using a digital wallet is convenient and—with its emojis and avatars—can even be fun. Consider how comfortable you are with technology, who you’d want to send money to and their comfort with technology, as well as what occasions you’d use it for. Maybe it’s something you’d like to try; maybe not. But now you know what “Venmo-ing” is.

At Roth Elder Law, PLLC, we believe in providing services in a way that clients can easily understand, whether we’re blogging about an emerging trends that may be of interest or working together on your estate plan. If you’d like to work with us, Roth Elder Law, PLLC would be happy to start that conversation. Call us today to schedule an initial meeting at 607-962-6162.

Contact Us Today

We at Roth Elder Law, PLLC, believe in providing services in a way that clients can easily understand and meaningfully participate in designing and maintaining their estate plan for their loved ones, as well as be assured that their plan will be administered according to their wishes.