Over the past few years, the number of apps that allow individuals to pay each other through social networks has grown. These peer-to-peer (P2P) payment apps make it easier to split the rent between roommates, pay back a friend after drinks, and even purchase items at a garage sale.
Part of the reason for Cash App's recent successes has been its ability to monetize a growing user base. A difficult task for P2P platforms, Cash App has achieved this by adding and showcasing many revenue-driving services.
Keep reading our Cash App review for what you need to know about how Cash App works and why it continues to grow in popularity.
What Is Cash App?
What do you need to know about this P2P platform? For starters, it's owned by Square Inc., a financial technology industry leader. Besides Cash App, Square also sells point-of-sale hardware and software for enterprises of all shapes and sizes.
Square first went public in 2015, and since then, it has expanded into one of the largest payment processing companies in the United States. It has also grown its business model by moving into other areas such as employee management, scheduling, and business analytics.
Cash App permits customers to use their smartphones to pay for services and goods and was initially created to compete with services like PayPal's Venmo, Google Pay, and Apple Pay.
Because of its rise in popularity, Cash App now permits users to receive direct deposits and even ACH payments. The app has also made a recent foray into cryptocurrencies, giving users the ability to transact in Bitcoin through the app.
The app also recently introduced a new feature known as "Investing." This feature permits traders to trade stocks within the application commission-free.
Cash App's Business Model
At this point, you may be wondering how the platform makes money. It charges businesses that accept Cash App payments a 2.75 percent transaction fee. These fees get charged in one of two ways:
- An in-application P2P payment to a business
- Use of the app's Cash Card to pay a business
What is the Cash Card? The app's Visa prepaid card, which is linked to their in-application balance.
This business model represents a winning recipe. It provides businesses with the ability to appeal to a new customer base by enhancing their payment options' flexibility. At the same time, it permits Cash App to monetize its services without impacting users.
After all, Cash App is free to download and use. That said, there are special services and perks of the platform that require customers to pay more. For example, if customers would like to expedite transfers, they get charged a 1.5 percent fee.
This fee permits users to receive a deposit instantaneously. Otherwise, users must wait two to three business days for a transaction to go through.
The platform also permits users to make a payment using a credit card for a three percent transaction fee. As Cash App's recent success and growth have shown, many individuals are willing to pay the price for convenience, no questions asked.
A Brief History of Cash App's Growth
By the third quarter of 2019, Cash App accounted for an impressive 25+ percent of Square's profits. Some experts predict that Cash App's growth could challenge Paypal's Venmo application moving forward.
Square was founded in 2009, and it its product gave small businesses the capability to accept credit card payments. From there, the company expanded.
In the process, it created an ecosystem of financial technology products that make it possible to manage a business using exclusively Square products. With Cash App, Square wanted to create a similar financial technology ecosystem for individuals.
While we've already discussed some of the limitations of using Cash App, Square hopes the ecosystem will one day replace individual bank accounts, an ambitious undertaking!
Cash App Goes International
In April 2018, Cash App launched in the United Kingdom. That said, the Cash App card remains unavailable in the U.K. Although users in both the U.S. and the U.K. have access to Cash App and its features, sending money between the two countries is not currently possible.
That said, Square's business solution products are available internationally. You'll find them in countries like Canada, Japan, and Australia. But the company has not announced when consumers in those countries will receive access to Cash App, too.
On March 18, 2020, the Federal Deposit Insurance Corporation (FDIC) granted Square conditional approval to open a bank. The bank, Square Financial Services, will open in 2021 offering small business loans and deposit products.
How Cash App Works
What's the user experience like when it comes to using Cash App? To start sending money on phones, download the app through Apple or Google. Then, create an account.
By creating this account, you'll receive a unique Cash App identifier or cashtag, which permits you to send and receive money from family and friends.
Sending and Receiving Money With Cash App
How does the process of sending and receiving money work? It's incredibly straightforward once you set up an account. Just type in the phone number, name, or cashtag of the person to whom you'd like to send funds. Then, type in the amount you wish to pay.
From there, the recipient will get a text message or email with the money you've sent. If you have the recipient's cashtag URL, you can even send money via a browser.
Where do the funds you pay come from? Either your Cash App balance, a credit card, or a debit card. To send and receive cash via friends and family in this way, there are ZERO fees, which explains some of the app's incredible popularity.
How do you request money from somebody? Go to the "Cash" tab located at the bottom of the center screen and enter a monetary figure. Then, hit "Request." Choose a person (or multiple people) by clicking on suggestions from a list or by manually adding their cashtag.
After you've built up a Cash App balance, you can transfer funds into a connected bank account. The platform lets you cash out the whole balance or specify a certain amount.
The app comes with options for how quickly you'd like to receive these funds. If you don't mind the standard two to three day transaction period, you'll enjoy the service for no additional charge. For expedited fund transfers, though, you'll pay extra.
How Much Can You Send Through Cash App?
Each 30-day period, you may send up to to $1,000 in funds. For this reason, you'll need to budget to stay within this limit.
Is it possible to increase this limit? Yes, if you don't mind providing additional information about yourself.
How Much Does It Cost to Send Money Through Cash App?
When you use Cash App, you'll be charged a three percent fee when you send money from a credit card. But if you use your Cash App balance or bank account to send money, you won't be charged any fees.
What about fees for sending money overseas? You won't be charged fees for transactions going to the United Kingdom. But you'll need to find another option if you want to send funds to other parts of the globe.
Benefits of Cash App
Cash App's popularity arises directly from the many benefits offered by the platform. What are the advantages of using this application? They include:
- Safe money transfers
- Alternatives to traditional banking
- Cash Card debit card for online and in-store purchases
- Cash App Boost discounts
- Ability to buy and sell individuals stocks
Let's take a closer look at each of these services and why users swear by this app.
Safe Money Transfers
Cash App makes transferring funds simple and streamlined. Yet, you'll have peace of mind knowing the platform relies on cutting-edge fraud detection and encryption technologies to keep your funds and data safe and secure.
What does this mean for consumers? Any data you provide to Cash App gets encrypted and transmitted directly to its servers. This process occurs whether you're on a public or private Wi-Fi connection or relying on data services (e.g., 3G, 4G, EDGE).
Alternatives to Traditional Banking
Many consumers have come to see Cash App as an alternative to traditional banking. That said, there are limitations when it comes to what you can do through the app.
Remember that the FDIC doesn't insure Cash App balances. In other words, if Cash App suddenly went bankrupt, you would have no protection for the funds deposited there.
You won't earn interest on your Cash App balances, either. For this reason, other consumers still prefer to hold the majority of their assets in an interest-yielding savings account or checking account over the long-term.
But you'll be pleased to know that Cash App does come with routing and account numbers like other financial institutions. These numbers make it handy to use Cash App for a wide variety of transactions.
You can even set up direct deposit to the account, thereby avoiding the necessity of a regular checking account.
Not sure how Cash App compares to other crypto savings accounts? Here's what you need to know.
Cash App's Debit Card
An increasing number of consumers are also taking advantage of the app's debit card. When you sign up for this debit card option, you can use it to make online and in-store purchases drawn directly from your Cash App balance.
You can also use the debit card at ATMs, but you'll pay a transaction fee. Remember that you can't add cash to your balance through the app.
What happens if your card gets stolen or lost? You can disable the card within your app. Incidentally, if you find it again, you may enable it there, too. You can also order a new card if you can't find the old one.
Who provides the Cash App debit card? It's a service of Lincoln Savings Bank.
Want to learn more? Compare the best crypto credit cards and debits cards.
Cash App Boost Discounts
What are some of the benefits of using this debit card? For one, you can take advantage of Cash App Boosts. Launched in May 2018, Boosts are steep discounts offered at select businesses, including restaurants and coffee shops.
How much can you save by taking advantage of Boosts? Expect to get up to 10 percent off on purchases made for everything from online gaming networks to grocery stores.
How do you take advantage of these offers? Head to the app to check out available Boosts. There, you'll find a list of everything you have access to.
There's a caveat to this. You may only activate one Boost at a time. But can swap them out as often as you'd like.
The Boost feature is intended to motivate consumers to use their Cash Cards often. New Boosts get announced through social media. These Boosts get added regularly as Square acquires new partnerships with popular brands. In January 2019, Square launched a similar free debit card for businesses called Square Card.
Investing With Cash App
How does investing with Cash App work? Consumers may open a brokerage account with Cash App Investing.
What is Cash App Investing? A FINRA-registered broker-dealer.
What does Cash App Investing allow you to do? Buy and sell individual stocks utilizing your Cash App balance. To use this option, you must have at least $1 in your account.
What do consumers like about Cash App Investing? For one, it's a self-directed brokerage account. In other words, you're ultimately in charge of where your money goes.
Of course, this also means Cash App Investing doesn't offer any investment advice or recommendations. And when you use this feature, you’re limited to the individual stocks offered by Cash App Investing.
What if you want to build a more robust and diversified portfolio? Consider using a robo-advisor.
This approach will allow you to invest in a wider variety of asset classes. And you can do it from the convenience of your smartphone or computer.
Cash App's Foray into Cryptocurrencies
In 2017, Cash App began permitting users to apply their balances to buying and selling Bitcoin. What does this foray into the crypto sphere mean for consumers?
You can now apply your Cash App balance towards the purchase or sale of Bitcoins in the app. And it takes a mere matter of seconds to do this.
How does it work? Under the Investing tab of Cash App, locate the Bitcoin "Buy" and "Sell" features. To buy Bitcoin, apply your Cash App balance. Note that to complete the transaction, you may need to enter some geographical information.
You may also make Bitcoin deposits of up to $10,000 during a seven-day period with Cash App.
How about selling Bitcoin? Tap the "Sell" button and enter the amount you'd like to part with. Remember that you may incur fees for such transactions, so always read the fine print.
Bitcoin Transactions and Fees
When Bitcoin transactions were first introduced, there were no fees for the service. But in late 2019, the app started charging customers user fees amounting to as much as 1.76 percent on crypto purchases.
Besides service fees, you'll also notice a difference of one to four percent between what individuals pay for Bitcoin versus Bitcoin exchanges.
That means Cash App might purchase a Bitcoin from one user at a rate of $9,900 and then sell it to another for $10,000. In the process, the company makes a revenue of $100.
How does the app calculate these prices? Based on market fluctuations in the value of Bitcoin.
The platform makes extra money by factoring these price differences into what it offers users. As you can imagine, cryptos have proven quite profitable for Cash App so far.
How Cash App Compares to Other P2P Platforms
We live in a world defined by the use of mobile devices. Why? Because consumers ultimately prize convenience, often, even above money.
Users are willing to pay for convenience and, as a result, are increasingly dependent on digital wallets. For this reason, P2P applications have been on the rise, and the competition has proven intense.
Cash App competes with a variety of other P2P players, including PayPal. And don't forget that PayPal holds a huge market capitalization of $114.8 billion! How do they currently compare? Cash App's user base stands at 24 million, while Venmo's user base is approximately 40 million.
Besides PayPal, Cash App must also compete with smaller P2P applications such as Google Pay and Apple Pay. Remember that these apps come pre-installed on Android and iPhone devices, which give both Apple and Google a distinct advantage when it comes to winning over new customers.
For Cash App to survive in this cutthroat ecosystem, the platform's innovators must continue to roll out features that not only excite current users but attract new ones.
How Safe Is It to Use Cash App?
We've already hinted at the security of Cash App, but let's take a closer look at its safety. After all, the last thing you want to do is put your money at risk by using it.
The app boasts that information is encrypted and sent through secure servers. But there are a variety of additional security measures you can take to ensure your data, money, and account stay out of the hands of a bad actor.
Cash App recommends enabling an in-app security lock, which requires a passcode for each deposit and payment transaction. That said, you must still use discernment when sending money to people you can't vouch for.
This precaution proves especially true if you're attempting to purchase products from somebody. What are some of the most common scams people have seen when using Cash App? Number one are purchasers who ask for payment in cash only to ghost you without providing you with the products you've purchased.
There's also been a recent scam where individuals will call or text pretending to be Cash App customer service representatives. These representatives instruct customers to set up a new Cash App account to fix the app's problems. Then, they use this as an excuse to make off with your Cash App balance.
The best way to avoid these issues is to be careful with whom you do business. And never, ever give out personal or account information.
Pros and cons of Cash App
- Same team as Square and backed by them
- Refreshing design on a banking app
- Incredibly simple and fast to use
- Very easy to buy and hold Bitcoin
- Great for sending or receiving money from friends
- Still limited in features that are crucial for some people
- Some markets still don’t have the ability to get a Cash App card or buy Bitcoin
Frequently asked questions about Cash App
We’ve compiled some answers to questions we often get. Should you have any other questions, feel free to reach out below in the comments.
Where is Cash App based?
Cash App is based in San Francisco, California. They share an office with Square Inc.
Where is Cash App available?
Cash App is available in the UK and US
What cryptocurrencies can I buy with Cash App?
For now you can only purchase Bitcoin. There are no known plans to add more
Is there a Cash App card?
Yes, in the US
Does Cash App have an Android app?
Yes it has an Android and iPhone app
Cash App: The Takeaway
Cash App is a convenient app that you'll find countless applications for in daily life. Whether you use it as a tool to circumvent hassles like splitting up a check after dinner or getting your roommate's money at the end of the month.
The app also makes it a cinch to handle many basic banking services, and it facilitates investing in stocks online. Recently, the addition of crypto options has made the application even more attractive.
There's a caveat that you must keep in mind, though. The app has limitations, including the $1,000 send and receive maximum each 30 days. Before you send a friend or relative money, you must also wait for their account to be verified.
You'll need to remain careful when it comes to sending cash. Remember that if you accidentally send money to the wrong individual, you may never get it back. So, be sure to check and re-check
Also, be careful when sending cash. If you accidentally send money to the wrong person, there’s no guarantee you’ll get it back. Check and re-check the phone number, email address, and $cashtag before hitting the "send" button.
Cash App Review 2021
Cash App makes sending money on phones easier than ever. It facilitates safe money transfers and makes investing in stocks and cryptocurrencies compellingly easy.
Are you ready to learn about leading financial and crypto platforms? Besides our Cash App review, check out our list of the best platforms on the market.