Is it safe for merchants to accept new digital payment forms like PayPal, Venmo, Zelle?

New payment apps carry risks, so only allow them with people you know and trust

Your Business Credit with Elaine Pofeldt

Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of Her book, “The Million-Dollar, One-Person Business,” was released in 2018. She writes "Your Business Credit," a weekly column about small business and credit, for

Ask Elaine a question, or see if your question has already been answered in the Your Business Credit answer archive.

What safe payment options can I offer clients who don't want to pay by either check or credit card?

New – and increasingly popular – payment solutions such as PayPal, Venmo and Zelle can be convenient, but only with people you know and trust. These new payment apps lack the same protections offered by more traditional payment methods, such as credit cards.

If you want to stay safe, stick to check, cash or credit card payments.

Expert Q&A

Check out all the answers from our credit card experts.

Dear Your Business Credit,

When I invoiced a very young client, she did not have a checking account or checkbook and just sent me her credit card number by email (not by my request!).

I had to figure out a way to let her pay me and, though she felt it was too time-consuming, had to gently steer her into letting me turn on the credit card feature on QuickBooks, so she could pay me that way.

Going forward, what should I do when clients don’t want to pay by either check or credit card? I’m concerned that some of the newer payment methods are not as secure as either of these options, and would hate to see a client fall victim to fraud on a transaction with me. – Ellen 

Dear Ellen, 

That’s a good question, and it’s coming up for more businesses. Many people no longer have checking accounts or want to use them in an era of digital payments. And younger clients who don’t have good access to credit may not have credit cards, either.

See related: Credit, debit cards slowly losing ground to digital payments

Alternative payment options for small businesses

My first choice in situations like this is ACH payments, which move money from the client’s bank account to the merchant’s electronically.

The major accounting software platforms allow small-business owners to turn on the ACH payment feature in their invoices as an option.

I’d suggest that if you’re already using QuickBooks you go this route. There are no processing fees for ACH payments, making them more cost-effective for merchants.

PayPal for small businesses

Another option that many merchants use is PayPal.

PayPal is an online credit card processing service that lets merchants accept credit and debit cards, as well as money someone has put into their PayPal account.

See related: PayPal credit: A guide to PayPal’s virtual credit line

Because of the latter feature, PayPal can be a good option for people who don’t have credit cards and don’t want to pay for a purchase with a debit card.

  • For credit cards, the processing fee is 2.9 percent plus 30 cents per transaction.
  • PayPal says it offers 24/7 fraud protection. It also sends alerts if it detects suspicious activity.

One drawback of PayPal is that banks don’t always consider the money a merchant has amassed in a PayPal account when considering whether to issue credit, the way they would the money in a traditional bank account. This can be a drawback if you’re trying to build your business credit.

Venmo for small businesses

These days, more clients are trying to pay with Venmo as well.

  • Venmo is a digital wallet you can use to send and receive money.
  • It is free if someone pays with cash, but there is a 3 percent fee for credit card transactions.

If you are working with a client you know well and trust, Venmo could be a good option.

Venmo says it uses encryption to protect account information and monitors account activity for unauthorized transactions.

If you were to lose your phone, you can log on to Venmo to prevent your phone from accessing your Venmo account. You can also add multifactor authentification and add a pin code.

See related: How to send, receive money using Venmo

Nonetheless, Venmo has its limitations. You have less protection as a merchant than you would with a bank transaction or credit card payment. Venmo does not offer buyer or seller protection and therefore discourages transactions with people you don’t know. That’s a big consideration.


Tip: Choosing a payment solution that offers your customers the best possible consumer protections is one way to protect yourself, but there are other steps you can take to protect your business from ID theft. These include operating with a separate employer identification numer (EIN), securing sensitive files – online and offline – and establishing good internal controls, among others.

Zelle for small businesses

A third option that more people are using today is Zelle.

  • Zelle allows people to send and receive money through your bank’s app or through the Zelle app if your bank does not have its own. Zelle doesn’t charge to send and receive money.
  • Zelle describes itself as a fast, safe and easy way to send and receive money among people you trust. The company says it uses authentification features to make payments more secure.

However, like Venmo, Zelle isn’t really designed for merchant transactions, which may include purchases by strangers.

“If you don’t know the person, or aren’t sure you will get what you paid for [for example, items bought from an online bidding or sales site], we recommend you do not use Zelle for these types of transactions,” the site says.“These transactions are potentially high risk... Neither Zelle nor the participating financial institutions offer a protection program for any purchase or sale conducted using Zelle.”

The upshot: You’re better off using traditional forms of payment such as ACH payments, credit card payments and checks than newer additions to the landscape, so you have the protections they come with.

If you are going to use newer services, only do so with people you know and trust.

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 03-24-2019