Zelle, Venmo, etc: separate bank account?

[twaddle]

My spouse and offspring both like to use Zelle and Venmo -- those newfangled payment systems that suck money right out of your bank account.

That makes me nervous.

So my plan was to create separate accounts for each of them, with limited balances, that they could easily refill post-Zelle as needed.

You seem like a smart crowd, so I thought I'd run it by you first.

If that seems reasonable, then my next goal would be to ensure we don't get nickeled-and-dimed for accounts with low balances.

And a bonus would be finding accounts with a sign-up bonus.

Anybody do this: minimize risk, minimize fees, maximize sign-up bonuses?

 

[lordjust]

My spouse and offspring both like to use Zelle and Venmo -- those newfangled payment systems that suck money right out of your bank account.

That makes me nervous.

So my plan was to create separate accounts for each of them, with limited balances, that they could easily refill post-Zelle as needed.

You seem like a smart crowd, so I thought I'd run it by you first.

If that seems reasonable, then my next goal would be to ensure we don't get nickeled-and-dimed for accounts with low balances.

And a bonus would be finding accounts with a sign-up bonus.

Anybody do this: minimize risk, minimize fees, maximize sign-up bonuses?

I have used Zelle for a couple years now ... no issues.. I understand your concerns though but havent taken the steps you are suggesting for protection. Just my .02 to confirm others are using the service.

 

[rodi]

I use venmo for transactions between me and my kids - and to pay the piano teacher for y son's skype piano lessons. (Used to give her a check... but that was pre-covid).

Sure venmo sucks directly out of your account - but only if you tell it to... AFAIK, it can't be set for 'pulls' or auto payments. I have to push 'pay' for money to get drawn out of my account.

 

[twaddle]

I could be wrong, but my impression was that even for a "push," if you accidentally send to the wrong account or send the wrong amount, there is no recourse.

(I guess we'd be hosed either way on the wrong account error, but a missing decimal point might be caught by the low-balance firewall.)

 

[geeky_grrl]

I don't like to link things like that to my primary checking account. I have a secondary checking account I keep a smaller amount of money in for things like Paypal, and Zelle. I also will use that ATM card when I'm at a machine I'm more concerned about (like an ATM at a bar). Maybe I'm paranoid, I haven't had a problem with these services but I'd rather limit the blast radius if I do have a problem.

I haven't had a hard time finding free checking accounts without high balance requirements.

 

[daver]

Same here been using it with DS's to request and provide funds. We all have ACH setup to our primary bank checking accounts.

"As far as payment activities go, Venmo is considered safe since it uses bank-level encryption to protect your financial information. Plus you can choose to add layers of authentication including a required PIN number."

 

[cathy63]

I could be wrong, but my impression was that even for a "push," if you accidentally send to the wrong account or send the wrong amount, there is no recourse.

(I guess we'd be hosed either way on the wrong account error, but a missing decimal point might be caught by the low-balance firewall.)

Yes, if you send money to the wrong person, it's very difficult to undo that. I just read a story about Zelle earlier this week. https://www.elliott.org/problem-solved/sent-money-stranger-mistake-chase-zelle-fix/

I have used Zelle, but only with people I know and have texted with so I know I have the correct phone numbers. If I absolutely had to send funds to a stranger, then I'd verify the phone # or email address by communicating outside of whatever app I'm using first.

I am not very worried that Zelle or Venmo or PayPal or Google Pay will take more than I authorize out of my checking account, and if it did happen, I figure I could eventually get it fixed, so I don't have a separate account just for those types of services. For all ACH transactions, including these types of ad hoc payments, I do use a credit union checking account that never has more than 3 months worth of living expenses in it. I also write checks and get cash at ATMs with that account.

Our brokerage also offers investment linked checking accounts with overdraft protection where they'll sell your investments to cover your expenses if necessary. That seems way too risky to me, so nobody has "pull" access from that account. I use it to push money into the CU account each quarter, but that's it.

 

[Wheel]

Recently I transferred funds to someone for the first time, and Venmo asked me for the last 4 digits of the recipients phone number. Made a lot of sense to me and I can see how it helps prevent erroneous transfers.

 

[sengsational]

In my experience, if you dig into the terms and conditions, if you give any of these companies your bank routing number and account number, you've agreed to "pulls", whether you think you think you agreed to just using it to accept deposits or not. Keeping a separate account is ok, but a PITA if you want to transact a larger amount...takes a few days to move money into the separate account.

 

[Sunset]

I could be wrong, but my impression was that even for a "push," if you accidentally send to the wrong account or send the wrong amount, there is no recourse.

(I guess we'd be hosed either way on the wrong account error, but a missing decimal point might be caught by the low-balance firewall.)

I don't use those.
But if I did, I'd open a separate bank account.

Of course you would want the bank account to have enough $$ in it so it's not a hassle requiring frequent transfers.

Alternatively, just don't have more than a few thousand in your regular checking account, and turn off overdraft, so the bank cannot take funds from the savings account. This way you only have 1 checking account to keep an eye on.

 

[jollystomper]

Separate accounts are fine. I'm not concerned about getting a bonus as long as the account is free. We have a separate bank account to connect to things like Zelle, Vemno, Paypal, etc. It is via a credit union, no need to keep a minimum balance.

 

[Dash man]

I’ve used Zelle for a couple of years and never had a problem.

 

[MuirWannabe]

I use Zelle, Venmo, and Cash apps. They all have worked just fine. I personally prefer Cash as the easiest user interface.

I set up a Venmo business account for a non profit I’m the treasurer for. Most of our meetings have gone Zoom and collections were down accordingly. Venmo allowed contributions even while zooming.

So very convenient. I like these apps.

 

[Gotadimple]

I haven't had a hard time finding free checking accounts without high balance requirements.

Look for a credit union instead of a commercial bank! You can get a free checking account and in some cases the minimum balance is low (under $1000), there are no fees, and they pay interest (not a lot these days!) on the balance in the account.

With Covid you can do business with them over the internet. Look around in your community then check them out on-line.

- Rita

 

[Lucie]

We have had no problem with Zelle. Our tenants use it to pay their rent. We have had problems with PayPal charging fees for friends’ payments. Both times they charged a fee, saying it was for “goods and services“. The first time I questioned it, got nowhere and let it slide. Last week they charged $73 for a friend’s transfer of money. My friend clearly indicated that it was “friends and family” and not “goods and services”. I tried to contest it, but they weren’t helpful. I asked if I could refund the money so she could Zelle it to me, But they will still keep the fee. Never again will I use PayPal between friends or family. I have no confidence in a company that says they “ can’t” remove a fee. From what I heard, this is not An isolated problem.

 

[gayl]

I use zelle without any problems BUT I always send $1 to the person 1st then the balance. And only to those I know (friend, kid, hairdresser). Everyone else gets a check & ATT / Xfinity / trash / water / insurance are on autopay. PayPal is only for Macy's and Target

 

[daver]

My understanding of how Venmo works is there are no "pulls" since you are in the loop authorizing both requests for payment or sending of a payment. So it comes down to security of your bank account info in Venmo.

I recommend logging out of the Venmo app after use in case you lose your phone. In addition there is multi-factor authentication when signing into the app and they send a code to the phone number registered with your Venmo account.

So with a strong password I'm not too worried about Pulls

 

[Katsmeow]

In my experience, if you dig into the terms and conditions, if you give any of these companies your bank routing number and account number, you've agreed to "pulls", whether you think you think you agreed to just using it to accept deposits or not. Keeping a separate account is ok, but a PITA if you want to transact a larger amount...takes a few days to move money into the separate account.

I can't speak to Venmo or Cash App but Zelle is different. Zelle is set up by several of the large banks and is a bank to bank transaction. You send the money on Zelle. As that interesting article posted made clear, you have to be sure you are sending to the correct person as you can't get the money back if you send to the wrong person.

I don't use those.
But if I did, I'd open a separate bank account.

Of course you would want the bank account to have enough $$ in it so it's not a hassle requiring frequent transfers.

Alternatively, just don't have more than a few thousand in your regular checking account, and turn off overdraft, so the bank cannot take funds from the savings account. This way you only have 1 checking account to keep an eye on.

My banker made this point to me awhile ago. She recommended keeping as little in the checking account as I could -- well, enough, to meet the minimum and enough to cover all transactions. But she said that there was enough fraud going around they had seen that she recommended people keep their money mostly in the savings account and just transfer as needed. Since then I have basically done that. I also don't have overdraft on that account for just this reason.

 

[Onward]

Does Venmo have any advantages over PayPal?

 

[Splash]

I use Zelle to pay for our 4-month snowbird rental each year. The annual deposit payment of $1000 goes through almost immediately. The other 2 payments exceed the $3000 Zelle limit and don't process (for about 3 days) until my bank's fraud department verifies the payments with me.

 

[sengsational]

My understanding of how Venmo works is there are no "pulls" since you are in the loop authorizing both requests for payment or sending of a payment. So it comes down to security of your bank account info in Venmo.

I recommend logging out of the Venmo app after use in case you lose your phone. In addition there is multi-factor authentication when signing into the app and they send a code to the phone number registered with your Venmo account.

So with a strong password I'm not too worried about Pulls

As long as everything goes as planned, there are no pulls. The problem is when something doesn't go as planned. Say you got some money put into your account that you deserved, but later Venmo decided, beyond a shadow of their doubt, that you didn't deserve it. I bet they have the power to reverse it, pulling money out of your account. Now, I can't say for sure that's the way it is because I haven't read the fine-print, but I would certainly be surprised that if you "link your bank account" to ANY of these things, that they don't have the power to pull, if they decide to. Not that they'd just yank money for no reason, but they might yank money when you don't think they should, and you'll be left without the money and sitting on hold (if they even have a call center), trying to sort it out. Is it worth the risk? Probably, because paying with these services is quite convenient. It doesn't mean I'm super comfortable with these services.