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The options available to consumers for sending money are no longer limited to simply paper checks, cash, or money orders. Consumers are increasingly using money transfer applications (apps) on their smartphones, tablets, or computers to send money over the internet. In essence, a money transfer app is the 21st century wire transfer. Apps allow the user to make payments to individuals or companies, send money domestically or internationally, split a bill, or pay for a product. But each application has its own limitations and safeguards. The Massachusetts Office of Consumer Affairs and Business Regulations (OCABR) has conducted a survey to find out how these apps work, including their costs and capabilities and the measures offered by each service to protect the consumer’s account.

How does it work? While each app varies, most money transfer apps involve creating a user account and linking it with a personal banking (checking or credit) account. Some apps allow users to transmit money to anyone with an email account while others require both the sender and recipient of the money to be a user of that app. Funds are then sent between accounts, but apps may still vary with how quickly the recipient can access those funds after the transfer. Be careful to consider this if you need the funds to be available right away.

How are you planning to use your money transfer application? Many people use these money transfer apps to quickly transfer cash to friends to efficiently split the bill when going out to dinner, or in similar situations. But if you are sending money overseas to family, or to people not on the app, consider whether the app is right for those situations.

International or Domestic: Generally, money transfer apps are capable of sending funds from one person to another within the United States. Not all apps allow international transfers, and those that do may not allow transfers to every country. Of the six applications surveyed by OCABR, only two of the applications were found to offer international transfers. Consult individual websites or contact the money transfer app provider individually to ensure the app sends to a particular country.

Costs/Fees: Some money transfer apps do not have fees. Others provide for fees under certain circumstances. Still others include fees based on the type or amount of the transfer. Users must be mindful of fees assessed per transfer (if any), who is being charged, charges for domestic as opposed to international transfers, or charges for transfers between accounts on the same application. Of the six applications surveyed by OCABR, two charged no fees whatsoever, three offered free transfers between accounts, but assessed fees for other transfers, and one had a required fee in every circumstance.

Other things to consider: Like other online services, money transfer applications offer various levels and methods of protection to your personal information. Consumers should consider whether the application offers safeguards such as data encryption, zero fraud liability, or other unique methods of account protection.

Some apps are insured by the Federal Deposit Insurance Corporation (FDIC), which guarantees account funds up to $250,000. Of the money transfer applications surveyed by OCABR, only two of six applications offered FDIC insurance.

What money transfer applications are available? Though this list is not exhaustive, it is indicative of some of the most widely-used money transfer applications in the market today. Each of them was included in the OCABR survey:
• Venmo: https://venmo.com/
• Google Wallet: https://www.google.com/wallet/
• PayPal: https://www.paypal.com/
• Facebook Messenger: https://www.messenger.com/
• Xoom: http://www.xoom.com/
• Various Banks (Ex. Chase Bank) https://www.chase.com/business-banking/online-banking/quickpay/

While money transfer apps are growing in popularity and usefulness, consumers should understand and consider the varied features of apps, including specific terms and conditions of use and safeguards to ensure the protection of personal information when deciding whether the app is right for them.

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