The digital world is introducing new money transfer methods for younger generations, and peer-to-peer (P2P) platforms are emerging as efficient financial tools.
Combined with this innovation is a powerful opportunity for parents to teach their children how to use these tools wisely while avoiding potential stumbling blocks.
Venmo, which has been leading the march in this space, launched a dedicated account for teenagers on a recent Monday. Parents can start these specialized accounts with special features for children aged 13 to her 17.
Venmo’s effort, which requires individual account holders to be over the age of 18, is a strategic move to introduce teens to the world of digital payments under parental guidance.
Venmo’s teenage accounts are enriched with debit cards, allowing them to raise funds from their parent’s account through a variety of linked sources. This arrangement allows parents to monitor their teens’ financial transactions and friendship requests.
In addition, you will also be able to control your privacy settings, ensuring safe transactions.
The P2P Phenomenon: Explore
P2P apps are now ubiquitous across the United States and are a staple in 64% of adult transactions. Notably, younger demographics aged 18-29 contribute to 81% of these transactions, as shown by a 2022 Consumer Reports study.
P2P apps such as Cash App, Square Cash, Apple Wallet, and Venmo’s parent company PayPal have introduced features for teenage users, but each has its own requirements. For example, PayPal still requires users to be over the age of 18.
Consumer watchdog Teresa Murray of the Public Interest Research Group (US PIRG) emphasized a cautious approach to P2P apps. Her caveat comes from recognizing potential pitfalls users can face.
US PIRG analyzed nearly 9,300 complaints to the Consumer Financial Protection Agency between 2017 and 2021, revealing consistent issues with digital wallets, fraud and customer service across multiple P2P apps. .
A 2022 study by LendingTree found that nearly a quarter of users admitted to accidentally sending money to the wrong recipient, and 15% reported being scammed. It shows the real impact and complications that can occur when using these services.
Smart practices for P2P users
Murray suggests that users fund their P2P accounts via credit cards. Credit cards offer stronger protection under the True Lending Act and the Fair Credit Billing Act in case of mishaps.
She also advises against using P2P apps to make payments to unknown parties and recommends asking for a payment request from the app before initiating a transaction.
With the rise of P2P platforms, it has become paramount for young users to secure their transactions and account access. Additional security measures include keeping transactions private, employing additional authentication to access apps, and refraining from sharing authentication codes.
As teens take their first steps into the world of digital payments, financial planners are urging parents to maintain open communication about money matters. Main Street Planning Certified Financial Her planner, Desiree Kaul, encourages her parents to keep communication open.
The P2P revolution is upon us and it is critical that parents equip their teens with the knowledge to navigate this new economic environment safely. As long as children feel comfortable asking for answers, they have a safe place to turn whenever financial questions arise.
After all, the digital future has already arrived, and it’s our responsibility to make sure our kids are ready for it.
The content of this article is partially inspired by a recent CNBC report.
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