What Are The Pros and Cons of Electronic Payment Methods?

If you buy or sell items on platforms like Facebook Marketplace, you’re sure to encounter electronic payment methods in one way or another. In this article, we go the pros and cons of all of them. They all protect buyers and sellers to differing degrees, and it’s important to understand them and exactly how they work.

The general concept of these electronic payment methods is that they allow one person to send money to another. Some of them are made for buying and selling transactions. Others are not. There are 2 basic types of payment methods to be aware of: those which allow you to contest payments, and those which do not.

PayPal: The oldest electronic payment method still around. PayPal has 2 modes of payment: “Goods and Services”, and “Friends and Family”

Goods and Services: A G&S payment comes with PayPal’s fee, which is a flat fee of 2.99%. By default, the seller (recipient) will pay the fee. However, if the sender is gracious enough to send extra, they can in effect cover the fee. The point of this fee is that if something goes wrong with the transaction, the buyer can file a claim with PayPal. If it’s found that the seller didn’t send the item, or something was terribly wrong with it, a PayPal worker will step in and investigate the case. Then, they will most likely send the money back to the buyer.

Friends and Family: These transactions have no fees. They also cannot be contested through PayPal. They are meant for people to send money to friends or family they trust, as the name states, and not meant to be used for buying and selling transactions.

Venmo: Venmo is a company that’s owned by PayPal. It also has the same 2 modes of payment as PayPal, and they function in the exact same way. The fee for Goods and Services is slightly lower, but is in effect exactly the same.

Facebook Marketplace Shipping: When an item is listed with shipping through Facebook Marketplace, Facebook acts as the middleman for the payment. They hold it for a certain amount of time, and charge a 5% fee to the seller. If the buyer has any issues with the transaction, they can file a claim through Facebook and potentially get their money back.

Only the above methods offer ways to contest the transaction. The rest of the payment methods do not offer any way to contest payments.

Cash App: Once a payment is made with Cash App, consider it done. That means once you receive money via Cash App, it’s as good as yours. If you send money via Cash App, it’s as good as gone. Much like if a buyer were to give cash to a seller in the parking lot, and then they both drove their separate ways.

 Cash App allows you to keep a balance in your Cash App account, which can be used for a variety of things in-app, or you can withdraw it to your bank account. If you’d like to learn more about why Cash App has gained notoriety and is not considered safe for buyers, read this article: https://hindenburgresearch.com/block/ . If you send money to someone on Cash App and they keep it without sending the item, Cash App offers absolutely no support because the app is functioning exactly as they want it to.

Zelle: Zelle is like Cash App in that it allows one person to send money to another, and offers no support for the sender. However, Zelle transactions make money go straight from one person’s bank account to another. There is no such thing as a “Zelle account balance”, because they don’t have anything like that. It’s just a way to wire money quickly and with 0 fees, and is next to irreversible.

Facebook Pay: Users can link their PayPal accounts, bank accounts, and debit cards to Facebook Pay. When a buyer sends money, the money is debited from their chosen account and sent to the seller. Even if the buyer has their PayPal account linked, it uses the “Friends and Family” type of payment, and therefore has no support.

You might think that a company as large as Facebook would offer support for buyers in case they are scammed. But they sure don’t. The only way they offer protection is you purchase something through Facebook Marketplace Shipping, where they collect a fee. They will tell you that Facebook Pay is not meant for buying and selling transactions. Actually, they don’t even have a place to complain to, because they offer no support whatsoever.

In conclusion, PayPal, Venmo, and Facebook Marketplace shipping are the safest place for both buyers and sellers. As long as the buyer chooses the goods and services option.

Are the transaction methods that offer no support actually irreversible?

In a vast majority of cases (over 99%), yes they are completely irreversible. There is one, and only one situation in which they can be reversed. That would be if another person hacks into your account without your knowledge or consent, and sends money with it. In this case, it’s considered a “fraudulent transaction” and can be reversed only by contacting your bank. The bank will then see if they can fight the transaction. However, the app that helped make the transaction will still fight against it, and try to make it permanent. This is a very rare situation, and almost never happens. Also, the payment app company you used will most likely ban you from ever using it again if you attempt this.

Now, another question you may be wondering: Can I use non-protected payment methods to buy and sell items?

The answer is: Kind of

We go into more detail in our next article.