In the old days, if you needed to split a dinner bill with your friends, everyone opened their wallets and threw their share of the tab in cash on the table. No more.
Now everyone reaches for their smartphone and transfers the money with a mobile payment app while still sitting at the table. Mobile payment apps have changed the way we send and receive money from friends and relatives. They're fast, efficient and, mostly, free to use.
Let's compare two of the most popular money transfer programs, Cash App and Venmo, and find out if one is better than the other.
What is Cash App?
Cash App is a peer-to-peer, or P2P, payment transfer system designed for smartphones. It was created in 2013 by Square Inc, a merchant payment processing company.
With Cash App, you can send money to your friends and relatives at no cost. You can also make purchases with a debit card, transfer money to your bank account, receive discounts from merchants, invest in stocks and trade Bitcoin.
According to the latest data from Business Insider, Cash App now has 24 million active customers.
What is Venmo?
Venmo is one of the most popular large P2P money transfer apps. Braintree, a payment processor, created Venmo in 2009 and later sold it to PayPal.
Venmo offers commission-free payments to friends and relatives, but does it with more of a social network flavor. You can liven up your payments with emojis and check out what your friends are doing with their money. Like Cash App, Venmo also offers a debit card, merchant discounts and the ability to transfer money to your bank account.
CNBC reports that Venmo has grown to 40 million users.
How Does Cash App Work?
You start by downloading Cash App to your mobile device from Google Play or the Apple App Store. Then you create a Cash App account and link it to your bank account and debit card.
You will not have an account number but instead will register your email address or phone number. If you want more anonymity, you can make up a unique $Cashtag rather than using your name or email to send and receive money.
After you set up your account, you will want to transfer some money from your bank account into your Cash App account. Once these funds are deposited, you can begin to make transfers or payments.
Besides using the Cash App screen to send money, you can use Siri to send payments with Cash App if you have iOS. You can say something like, “Siri, send $12 to Charlie for breakfast.”
How Does Venmo Work?
Essentially, Venmo works the same way as Cash App. You begin by downloading either Android or iOS software from Google Play or the Apple App Store.
Open the Venmo app and create an account. You can either use your Facebook account or manually enter your name, email, phone number and a password. Venmo will send a four-digit code to your cell phone that you can enter to verify your identity. Then you can allow Venmo to download your contacts from Facebook to get your friend list set up.
After the account is created, transfer some money in from your bank account and you're good to go.
Like Cash App, you can also use Siri to send money with Venmo.
Venmo’s default privacy setting allows everyone to see all of your transactions on its social network. Anyone who wants to see what everyone else is doing can log in and see every transaction. You can see the last time your best friend ordered sushi and went to the nail salon. Or you can see the last time your close group of friends went out to dinner. The good news is that Venmo doesn’t show the amounts, just the description.
If this sounds creepy and you’d rather not have your financial transactions spread across the internet, you need to change your privacy settings on Venmo. You can change the settings so that your transactions can be viewed by friends only or are completely private. You can even go back and hide all of your past payments.
With Cash App, all of your transactions are private. You don't have to change any of the default privacy settings.
What are the Benefits of Each App?
Debit cards - Cash App issues a Visa debit card, and Venmo uses MasterCard. You can use these cards to make purchases wherever they are accepted by the merchants.
Direct deposits - Venmo and Cash App both accept direct deposits.
Merchant Discounts - A major benefit of Cash App is its Boost program, which gives you instant discounts at restaurants, grocery stores and other retail merchants. Stores where you can receive discounts, for example, include Wendy's, Chipotle, Starbucks and Dunkin' Donuts. These discounts are substantial, ranging from 5 percent to 10 percent.
To compete with Cash App Boost, Venmo recently set up its own rewards program handled by Dosh. Like Boost, Venmo Rewards offers discounts at similar retail merchants such as Target, Papa John’s Pizza, Chevron and Sephora. You can also receive instant discounts at many online merchants.
The discounts offered by Boost and Rewards often exceed the cashback benefits you get when purchasing with your credit cards. It makes sense to compare both discounts when you’re shopping to get the best benefit.
Stock investment account - With Cash App, you can buy and sell stocks by opening a free Investing account. These are self-directed individual brokerage accounts. There is no account minimum balance, you can trade for as little as $1 and Cash App does not charge any commissions for buying and selling stocks.
Venmo does not offer a stock trading account.
Bitcoin - If you're into making purchases or trading Bitcoin, Cash App has this feature. You can deposit up to $10,000 of Bitcoin per week. Numerous online retailers, such as Overstock and Expedia, now accept Bitcoin as payment. If you prefer to make long-term investments in Bitcoin, you can set up automatic purchases on a daily, weekly or bi-weekly basis.
Venmo does not have a feature to buy and sell Bitcoin.
What are the Fees?
Basic services - Fees for basic services like making payments and receiving funds are free for both Venmo and Cash App.
Transfers to bank account - Venmo charges 1 percent for instant transfers from your Venmo account to your bank account. The minimum fee is $0.25, and the maximum is $10. Free transfers usually take one to three business days for availability.
Cash App also offers free transfers for availability in one to three business days. However, they’ll charge you 1.5 percent for instant availability with a minimum of $0.25. Unlike Venmo, Cash App’s website does not state a maximum charge.
ATM withdrawals - ATM withdrawals are free with Venmo if you use the MoneyPass Network. Otherwise, you’ll pay $2.50 for out-of-network withdrawals in addition to other ATM network fees.
Cash App charges $2 for each ATM withdrawal. Plus, you may also be liable for ATM network charges. However, you can avoid all ATM fees if you have your paycheck directly deposited into your Cash App account each month.
If your direct deposit paycheck into your Cash App account is at least $300, you will receive 30 days of free ATM fee reimbursements. However, you are limited to three ATM withdrawals per 30 days with a maximum of $7 in fees for each withdrawal.
Credit card fees - If you make a payment using your linked credit card, both Venmo and Cash App charge 3 percent.
What are the Restrictions?
Both Venmo and Cash App have restrictions on the amount of money you can send and receive until they verify your identity.
Venmo has a limit of $299.99 on the amount of money you can receive and send each week before verifying your identity. This limit is for payments to authorized merchants and person-to-person payments.
After verification, the overall weekly limit is increased to $6,999.99. The maximum person-to-person payment is limited to $4,999.99 per transaction and per week. The maximum amount that you can spend per week on purchases or the Venmo MasterCard is limited to $6,999.99. The per-transaction limit for merchant purchases is limited to $2,999.99.
When you first open an account with Cash App, you will have a sending limit of $250 per week. The receiving limit is $1,000 per month. You can increase the restrictions by verifying your identity.
According to Business Insider, after verifying your identity on Cash App, you can send up to $7,500 per week with no limitations on the amount of money you can receive.
How Secure is Each App?
Consumer Reports states that Cash App and Venmo use data encryption programs that are secure. However, CR recommends users take extra security methods.
Both Venmo and Cash App allow you to add an extra layer of security by creating a PIN code.
Each app also lets users add pictures to their profiles that make it easier to identify who you are sending money to. You should make sure you have the correct username, email or phone number before you press “Pay.”
What Happens if You Make a Mistake?
Payments made by mobile apps are instantaneous and, for the most part, irreversible. If you send money to the wrong person, you're not going to get much help from either Cash App or Venmo. You will have to depend on contacting the recipient and asking them to refund the money. If they refuse, you don't have any recourse.
The most important caveat is to only send money to people that you can absolutely identify, and you know and trust.
How Good is the Customer Service Support?
Cash App does not have a toll-free number to speak with a live person. However, you can call 855-351-2274 and listen to automated instructions; hopefully, you will find the answer to your questions or problems in the prepared lists.
On the positive side, Venmo offers a phone number, 855-812-4434, where you can actually speak with a live agent. You can also chat with support reps on weekdays and weekends.
Cash App and Venmo both offer the same basic services, sending and receiving money for free, and their systems are easy to use. Cash App had an advantage for a while with its Boost program that offered merchant discounts, but Venmo has evened that score with its Rewards program.
Venmo’s platform has more of a social flair with its connection to Facebook and posting of other people’s financial transactions. The choice between the two may ultimately depend on which one is the most popular with your group of friends.
- Business Insider: Square's Cash App User Base Surges to a Massive 24 Million
- CNBC: Venmo has 40 Million Users
- Venmo: How to Sign Up
- Venmo: Payment Activity and Privacy
- Cash App: Opening and Investing Account
- Cash App: Investing Fees
- Cash App: Bitcoin
- Cash App: Cash Out Speed Options
- Cash App: Free ATM Withdrawals
- Business Insider: How to Increase Your Cash App Transaction Limit by Verifying Your Sccount
- Consumer Reports: Why Apple Pay Is the Highest-Rated Mobile P2P Payment Service
- Venmo. "Bank Accounts and Cards," Accessed Nov. 25, 2019.
- Venmo. "Business," Accessed Nov. 25, 2019.
- Venmo. "Fees," Accessed Nov. 25, 2019.
- Venmo. "Payment Limits," Accessed Nov. 25, 2019.
- Venmo. "Security," Accessed Nov. 25, 2019.
- Venmo. "Payment Activity and Privacy," Accessed Nov. 25, 2019.
- Venmo. "Fees," Accessed Nov. 25, 2019.
- Venmo. "Venmo Card FAQ," Accessed Nov. 25, 2019.
James Woodruff has been a management consultant to more than 1,000 small businesses. As a senior management consultant and owner, he used his technical expertise to conduct an analysis of a company's operational, financial and business management issues. James has been writing business and finance related topics for work.chron, bizfluent.com, smallbusiness.chron.com and e-commerce websites since 2007. He graduated from Georgia Tech with a Bachelor of Mechanical Engineering and received an MBA from Columbia University.