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Peer-to-Peer Payment Apps: A Case Study for a Digital Finance Standard

Executive Summary

The digital finance marketplace is rapidly changing and evolving, with new forms of payment, new forms of investing, new ways to borrow and spend, and new kinds of currencies. Consumers must navigate this dynamic financial ecosystem, with its constant flood of new products, but they don’t have the information they need to make informed choices.

Between August and October 2022, Consumer Reports conducted an initial study examining the safety, privacy, and transparency of representative products in the peer-to-peer (P2P) payment systems industry: Apple Cash, Cash App, Venmo, and Zelle. We based this examination on a subset of the principles CR has established in its new Fair Digital Finance Framework. Specifically, the Safety Principle is used to evaluate the technology and policies that companies use to protect consumer data and funds; the Privacy Principle concerns company data collection, sharing, and deletion policies; and the Transparency Principle concerns company disclosures of legal terms and consumer legal rights.

Key Findings:

●  P2P payment apps collect large amounts of consumer data, often share data with other companies, and often make it difficult for consumers to delete the data.

●  Policies for resolving fraud and errors can leave consumers at risk of losing money.

●  App disclosures and documentation contain vague descriptions of security measures; there may be discrepancies between companies’ disclosed security protocols and their practices.

●  Users have to meet sometimes-confusing conditions to ensure that their funds are covered by insurance under the Federal Deposit Insurance Corp. (FDIC).

●  Apps make it difficult for users to understand and track updates to legally binding documentation.

●  Users are generally required upon sign-up to give up certain legal avenues for resolving potential disputes.

●  Consumer disclosures are often difficult to find and read, reflecting a broad concern about transparency.