Can You Get Rewards By Using Payment Apps On Phone?

Pay With Your Phone

Thanks to alternative digital payment solutions like those we round up here, words like cashless and contactless have entered the vernacular. Like other tech areas, digital transactions have taken on greater importance in the face of the current COVID-19 health crisis. You no longer have to dig into your pocket and withdraw virus-covered bills and coins or even your credit card and hand them to a cashier. Instead, just pay with your smartphone. Not only can you pay this way at Macy's or McDonald's, but you can also pay your friends and acquaintances for outings, goods, or services. You can also use many of the apps included here to pay on web stores and within some apps.

Some of these services don't even require you to install a separate app: With Apple Pay, in-store payments are built into the Wallet app and person-to-person payments happen inside the Messages app. Zelle is most often available from your particular bank's app, rather than as its own separate app. Facebook Messenger lets you pay contacts in chat conversations.

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Paying People

Probably the most buzzworthy mobile payment option is peer-to-peer payments, as exemplified by Venmo. There are plenty of other choices for paying your friends directly, however. Apple Pay Cash, Circle Pay, Facebook Payments, Google Pay, PayPal, Square Cash, and Zelle all let you settle up with other people. With Apple Pay, you can only pay contacts who have iPhones, though, whereas Venmo and the rest are cross-platform services.

When you receive money, most apps store your money in a holding place, a sort of limited bank account. Zelle and Google Pay are the exceptions here, delivering funds directly to the recipient's bank account. Several of the apps, like Venmo, require a fee to dump money from your app account into your bank account (see next section).

Fees for Mobile Payments

Most person-to-person payments are free with these apps, unless you use a credit card rather than a bank account or debit card. A fee of about 3 percent comes from the credit card provider when you use that as your payment source. But keep in mind that you still get cash-back points with some cards—and you may even get bonus points for using mobile payments—so you'll want to do the math to see which payment method benefits you most.

Some services charge yet another fee when you want to transfer received money to your bank account. Square Cash charges 1 percent for this if you enable its auto-deposit feature, and Venmo charges 25 cents per expedited deposit. Zelle is the best deal here: Because it's connected to the banks, sent money goes straight into your bank account, rather than into the payment service account. Google Pay doesn't charge to dump money into your bank account.

Another situation in which you'll pay even higher fees is international transfers. For details, see the International Support section below.

Payment Limits

The services vary in how much they let you pay, but they generally increase your maximum allowed payment with increased usage. Venmo and Square Cash start you out with a cap of $300 per week. Zelle's limits are determined by your bank. The Ally online bank, for example, limits you to sending up to $5,000 per day and $10,000 per month via Zelle. Google Pay lets you send up to $10,000 per week right off the bat.

Paying in Stores

A few of the apps included here let you pay stores as well as your friends. Google Pay, Apple Pay, and Samsung Pay are strong contenders in this area. Apple has outpaced all other comers in in-store contactless payments. Samsung Pay is distinguished in that it works wherever a magnetic stripe card does, though those have largely been replaced by the more secure NFC point-of-sale devices.

The PayPal app also can be used to pay in a selection of stores, though it doesn't support the direct NFC wireless payments that Apple Pay and Google Pay do. For us, there's nothing so satisfying as feeling the haptic "clunk" you get when an Apple Pay transaction completes.

Square Cash is a bit of a hybrid in this category: You can't pay in stores with the app per se, but the service will send you a debit card that you can use with any balance you've accrued in your Square Cash account from others paying you.

International Support

Only a couple of the apps and services included in this roundup can support payments to people abroad. The separate category of international remittance apps includes Xoom, which lets users send payments to people in 66 countries without the recipient needing the app or even a smartphone: They can simply pick of the cash in local currency at a nearby bank with a code and an ID.

As mentioned above, you incur greater fees for this cross-border convenience. When you send money to Guatemala, for example, Xoom charges $4.99 if you use a bank account and $6.99 for a credit card, along with whatever exchange-rate fee it may impose. This varies greatly by country: For payments to Finland, you pay nothing when using a bank account, but when using a credit card, you pay about 3 percent of the transaction amount.

PayPal lets you send money to over 200 countries, but the recipient needs a PayPal account. For in-store payments, Samsung Pay works in 17 countries beyond the US, and Google Pay works in the UK as well as in the US. Apple Pay works in stores in 26 countries, but person-to-person payments only work with U.S. accounts.

Paying on the Web and on a Watch

Many of the services let you pay via a web browser rather than solely through an app. PayPal is famous for this, and Venmo, Xoom, Google Pay, and others offer web interfaces as well. Apple Pay is weak in this area, since it only works in Safari on a Mac that's in the proximity of your iPhone.

Samsung Pay can only make web payments if you link a Visa Checkout account, but it works on the company's phones and (very well) on its smart watches. Apple Pay works on the Apple Watch, as you might expect, and there are a few Google Wear OS watches that support Google Pay.

Security

The apps and services that support in-store payments all use anonymized tokens, encrypted versions of your credit card number. The actual number isn't transferred, so it's actually safer than handing over your plastic. All of the services, because they transmit credit card information, must comply with the PCI Data Security Standard (PCI DSS)—the same standard used with analog payment cards. That includes things like implementing newer transport security than SSL and early TLS.

Further, most banks have a zero-liability policy for credit card fraud, meaning if you've been cheated, you don't have to pay anything (with certain reasonable limitations). By law, the maximum you could be responsible for is $50. Most of the services also use fraud detection technology to protect you, as well.

But person-to-person payments not involving credit cards are a whole different story: There's no protection for Venmo or Zelle money transfers to speak of. Once you pay someone in the app, you should consider it the equivalent of handing over cash, and equally easy or hard to get back. That's one reason why you should never use the p2p services to pay businesses or buy things on the internet with them: You could end up losing your money and not getting the product you thought you bought.

Another thing to be on the lookout for with these services is getting payments or requests for money from those you don't know. Well-known scams involve someone sending you a bunch of money through the app and asking you for repayment. A common scam is that the source of the payment to you comes from a stolen credit card. If you accept that money, you could find yourself in deep legal doo-doo.

The services included here often do more than just let you pay. There are a various extra perks that some offer such as those listed below.

Splitting Payments. Say your group of pals went to a fancy restaurant for a birthday celebration. How do you all pay your fair share? Many payment apps and services let you split a payment—simply enter the full amount and all the contacts that need to chip in. Of course, they need to be signed up with the payment service you're using.

Order ahead. LevelUp and others hook into local eateries and let you put in an order so that your lunch is ready for you to pick up when you arrive. It's similar to what's offered by some merchant-specific apps like the Starbucks app.

Loyalty cards. Many of the apps and services here let you enter loyalty program information to let you keep accruing those reward points. LevelUp, PayPal, Samsung Pay, and Google Pay are strong in this area.

Gift cards. Several of these apps offer a convenient way to combine all your cash or store gift cards. Usually you just have to snap a picture of the card and maybe enter a code to make the money available from the payment app.

Bitcoin and Investing. Only Square Cash among the apps included here let you purchase and sell Bitcoin, but you're probably using Coinbase or another cryptocurrency wallet if you're a Bitcoin fan. Square Cash also makes it easy to buy fractional stocks: For example, you want some Berkshire Hathaway (BRK-A), but don't have the $317,000 price of a single share. Pick up $100 worth in your Square Cash app.

Credit Cards and ATM Cards. The highest-profile example of this is the Apple Card, which offers 2 percent rewards (3 percent for Apple products) and some other nifty options. PayPal and Venmo both offer credit and debit cards, and Square Cash's debit card occasionally offers some very deep discounts. Samsung offers a card and a no-fee, interest-bearing money management account provided by SoFi.

Feel free to chime in on PCMag's social channels (Facebook, Twitter) to share your experiences and tips for navigating the brave new world of mobile payments. Let us know if there's one missing from our roundup that you love, or one included that gave you fits. In the meantime, keep that plastic and green paper in your wallet!