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By Kristen Jowers, MS MFT

Seventy-six percent of Americans report using a payment app for convenient fund transfers or when buying goods and services (Anderson, 2022). Imagine you go to dinner with a group of friends and the waiter isn’t able to split the bill. You pay for the meal and your friends quickly transfer their portion via a payment app to you and call it even. You leave the money in the app for the next time you need it. You can probably think of other ways that you and your clients routinely use payment apps in everyday exchanges of goods and services. These types of peer-to-peer transactions are made fast, easy, and convenient with the use of payment apps. However, holding money in payment apps indefinitely has drawbacks that you will want to make your clients aware of. 

The advisory from the Consumer Financial Protection Bureau (CFPB) urges consumers to be aware of the increased risks associated with holding money in payment apps without deposit insurance. Deposit insurance, provided by the Federal Deposit Insurance Corporation (FDIC), safeguards consumer deposits up to a certain limit, typically $250,000 per depositor, per bank. This protection helps ensure that if a bank fails, depositors will be reimbursed up to the insured limit. Payment apps, while convenient, do not offer the same level of protection as traditional bank accounts. Unlike banks, payment app providers are not required to provide deposit insurance coverage for consumers’ funds. This means that if a payment app were to experience financial difficulties or become insolvent, consumers could have difficulty recovering funds and potentially lose their money. 

Bottom line: payment apps should not be substitutions for traditional bank accounts. 

To mitigate the risks, encourage your clients to regularly transfer funds from payment apps to accounts with deposit insurance. By doing so, consumers can benefit from the safety and security provided by deposit insurance and reduce their exposure to potential loss. To determine if your bank is FDIC-insured, look for the FDIC sign at your bank, on their website or use the FDIC’s BankFind tool.


Anderson, M. (2022). Payment apps like Venmo and Cash App bring convenience – and security concerns – to some users. Pew Research Center. Retrieved from 

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