I received a message saying that one of my contacts has just downloaded Lydia. How does Lydia know that I know this person?
Lydia allows you to transfer money with all of your contacts, even if they don't have the app. However, these transfers are far simpler and quicker if you have both installed Lydia.
To let you know that one of your contacts has just downloaded the app, Lydia cross-references the numbers in your contact list with those of new users that have just created an account. The information used in these interactions undergoes one-way encryption.
Your contacts are not stored in Lydia's servers.
When you sign up, this option is automatically activated. To disable it, open your app settings and disable this option.