With so many new online banks, mobile payment apps and other tech-enabled ways of sending and receiving money today, how can you be sure the method you choose is safe and secure?
Most money transfer services try to appeal to users by emphasising how quick, easy and low-cost they are. But none of these benefits matter if their services aren’t also secure from start to finish.
To determine whether the services you’re considering keep your money and accounts safe and secure, you need to ask a few more questions.
For example, do they use encryption? Encryption protects data like personal information, payment card numbers and passwords by encoding it before sending over a network. Information sent that way is decoded only after it arrives safely at the intended recipient. Any money transfer service worth considering should provide strong encryption… but should also use a few other methods to protect financial transactions.
PIN numbers and passwords, for example, can help to verify users’ identity. However, money transfer services can and should add a second layer of security by backing those up with two-factor authentication. Also known as 2FA, this typically involves asking users to input a code sent to a device known to belong to them. By using this, a company has greater confidence that users are who they claim to be.
Any money transfer service you use should also notify you when anything important changes in your account. For instance, if you’ve changed your password, you should receive a message asking you to verify that change.
There’s more to secure money transfers than just protecting sensitive information, though. What about your money itself? Whichever service you use should be registered with the proper financial regulators in the countries where they do business, and should keep your funds separate from any of its own finances. That helps to protect your money even if the service provider goes out of business.
Beyond these considerations, there are also precautions that you yourself should take. With so many ways of sending and receiving money online, or via smartphones, wearables and other devices, scammers are always looking for new ways to trick you out of your money. This means you need to be alert to social engineering threats.
At least one money transfer app, Venmo, has in the past been used repeatedly by scammers looking for expensive items they saw advertised online. The would-be buyer would contact the seller and ask to pay for the item using the app; after receiving a notification via the app that a payment had been initiated, the seller would then meet with the buyer to hand over the item… only to discover later that the payment was never completed. In other cases, the buyer initiated a series of smaller payments, possibly using stolen payment cards, to cover the whole cost of the item; when the theft was discovered, the seller’s account was frozen and the “buyer” had gotten away with the item.
To avoid scams like these, the online security advisor Get Safe Online recommends that you avoid using money transfer apps for transactions with strangers. While such apps are quick and convenient for sending relatively small sums to friends, relatives or co-workers, online business transactions should be handled through payment processing services approved for use by major retailers.
Another option is to consider using your own bank’s money transfer service. Most big banks today offer their own online services for transferring funds to others, and these are usually also available as mobile apps.
There’s also the question, which is better: an online transfer or a mobile app? The answer depends upon several factors.
“Browsers are risky because there are trojans designed to collect banking information,” The Guardian said recently in an answer to a reader’s question about transaction security. “Apps are risky because most banking apps probably have security flaws, and because fake/malware apps sometimes appear in app stores.”
With a secure and up-to-date home PC, online transfers using a browser should usually proceed trouble-free, the article noted. For on-the-go transfers, however, a banking app will be the better option, as long as you are using a 3G or LTE connection, not Wi-Fi or Bluetooth.
Finally, be aware that new money transfer options are always emerging, which can mean both new opportunities for both you and for would-be scammers. Banks, for instance, are beginning to offer mobile services that let you send money using just a passcode and smartphone number.
Get Safe Online said services like Barclays Bank’s Pingit are “as secure as any other online banking transaction, and is protected by a user-specified five-digit passcode on the app itself.” However, it added, users should be careful to keep their passcodes secret – and not stored on their mobile device – and should double-check the recipient’s phone number before transferring money.”