As consumers have enjoyed the increased convenience of a cashless society, technology has responded by making it easier to use a smartphone to send and receive money quickly. Tech companies have created numerous mobile payment systems that consumers can choose from to suit their personal preferences.
One of the most popular and highly recommended mobile payment options is Cash App, which was developed by Square Inc.
What is Cash App?
Cash App is a peer-to-peer (P2P) mobile payment service that lets you transfer funds easily to your friends and relatives with your mobile device. You can pay your friends back for coffee or pay your share of a dinner bill, all before leaving the table.
Cash App also works like a bank account. It comes with a debit card that lets you make purchases using the funds in your Cash App account, as you would with a normal bank debit card. For more convenience, Cash App accepts direct deposits, like your payroll checks.
If you’re interested, you can also invest your money in stocks and buy and sell Bitcoin with your Cash App account.
How Does Cash App Work?
Start by downloading Cash App to your smartphone from the Apple App Store or Google Play. You'll create an account for free and link it to at least one of your bank accounts.
You do not have an account number but are recognized by your phone number or email address. If you prefer, you have the option to create a unique username called a $Cashtag.
You add funds to your Cash App account by using the debit card linked to your bank account.
The steps to send a payment are simple:
- Open Cash App on your smartphone by tapping the $ sign.
- Enter the amount you want to send.
- Tap “Pay.”
- Enter the $Cashtag, phone number or email address of the recipient.
- Enter the reason for your payment.
- Tap “Pay.”
You can use your linked bank account to send money to other users who have Cash App accounts. Conversely, you can also transfer money from your Cash App account back to your bank account.
The “Activity” button gives you a history of your deposits into Cash App and a list of payments.
Read More: Prepaid Card Vs. Debit Card
What are the Benefits?
No fees - Cash App doesn’t charge any fees on basic services to send or receive money.
Debit card - Cash App comes with a free debit card, which is issued by Sutton Bank. You can use this “Cash Card” to make purchases from merchants that accept Visas or use an ATM to withdraw money you have in your Cash App account.
Direct deposits - Cash App accepts direct deposits.
Cash Boosts - You may have a credit card in your wallet that gives you reward points, but Cash Boost is a debit card that gives you instant discounts at numerous retailers, grocery stores and restaurants. The list is constantly changing but includes such stores as Starbucks, Dunkin' Donuts, Popeye’s, Walmart and Whole Foods.
Investments - Cash App lets you buy stocks in certain companies for any amount you want to invest. You can buy stocks for as little as $1 with the funds in your Cash App account, or money can be taken from your bank account.
Bitcoin - You can use your Cash App account to buy and sell Bitcoin. However, Cash App charges a fee for each transaction and an additional fee based on the price volatility of Bitcoin in the U.S. exchanges.
Referral bonus - If you refer a friend and they sign up for a Cash App account with your link, you will receive $5 for each friend who signs up. They'll get $10 for opening an account.
Read More: Can I Buy Stocks With $50 Dollars?
What are the Restrictions?
With a new account, you can only send a maximum of $250 in a week and receive up to $1,000 within 30 days. After confirming your identity, the sending limit increases to $2,500 per week with no limit on the amount of cash you can receive.
Verification requires your full name, date of birth and the last four digits of your Social Security number.
Cash App limits the amount that you can spend on your Cash Card to $1,000 per day and the same per week. The monthly maximum is $1,250.
ATM withdrawals and cashback transactions at store registers are limited to $250 per transaction and $250 per day. The weekly limit is $1,000 and monthly withdrawals are limited to $1,250.
You can send money to your Cash App for free, but it might take up to three days for the transfer to appear. However, for a fee of 1.5 percent, you can make an instant deposit.
You must be 18 to open an account. U.S. users can only send and receive transfers from other U.S. account holders. You cannot make international payments.
What are the Fees?
Basic services are free. Cash App does not charge you any monthly fees or any fees to send and receive money.
If you set up direct deposit, Cash App gives you free ATM withdrawals. Otherwise, there is a fee of $2 if you use an ATM to make a withdrawal. In addition, the ATM network may charge you additional fees.
If you send money using a linked credit card, Cash App charges a fee of 3 percent. This fee is similar to other money transfer apps, like Venmo. You can avoid this fee by using your linked bank account or funds in your Cash App account.
Cash App supports debit or credit cards issued by Visa, Mastercard, Discover and American Express.
What Happens if You Make a Mistake?
This is the bad news. If you send money to the wrong person, it could be lost forever. There is no way to get the money back through the Cash App system. The transaction usually cannot be canceled.
Sometimes, the activity log will display a cancel option, but you can’t depend on that choice always being available. So, you would have to hope the recipient will be cooperative and send the money back to you. You can send a request to return the funds, but there’s no guarantee the recipient will respond.
Use common sense and only use a mobile payment app with people you know and trust.
What are the Security Risks?
Cash App has three types of security risks:
- Losing your cell phone
- Having cyber thieves hack your mobile wallet
- Finding malware on your cell phone
It's a good idea to avoid public Wi-Fi networks. Instead, use your cell phone’s digital network.
You have an option with Cash App to increase security by adding a PIN code or fingerprint ID requirement when making payments. Your Cash App debit card will have the same PIN code.
Although Cash App may do several things like a bank, it is not a bank. Funds in your Cash App account are not insured by FDIC.
- NerdWallet: https://www.nerdwallet.com/blog/banking/cash-app-peer-to-peer-money-transfer-service/
- Business Insider: How does Cash App Work?
- Business Insider:How to Add a Debit Card to Your Cash App Account
- CreditCards: 3 Major Mobile Payment Security Risks, and How to Avoid Them
- Bannkrate: Cash App: How to transfer money safely
- Cash App: What is a $Cashtag?
- Business Insider: How to Refund a Payment on Your Cash App Account
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.