DISCLAIMER. The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only.
In a Nutshell
Cash App is an extremely popular—and safe—peer-to-peer payment app. Similar to Venmo, Zelle, and PayPal, Cash App allows users to safely send funds directly to their friends and family or pay small businesses for goods and services.
Cash App does exactly what its name implies—it provides an easy way to transfer cash from one person to another. You can also use Cash App to pay bills, contractors, charities, and other small businesses. In short, it’s a versatile and convenient money-moving option. But is Cash App safe?
In This Piece
- What Is Cash App?
- How Does Cash App Work?
- Is Cash App Safe?
- Cash App Alternatives
We’ll unpack the perks of Cash App in this article, and then we’ll compare it to other payment options. Let’s begin with a thorough explanation of what Cash App is and how it works.
What Is Cash App?
Cash App is Square’s answer to PayPal’s Venmo. It’s Square’s peer-to-peer payment app—and it’s doing very well in the marketplace.
The COVID-19 pandemic caused an online boom, and self-service vendors were able to help meet that demand. Like many other user-friendly payment options, Square’s profits grew 32% year over year in the first quarter of 2021. Cash App did even better, growing 171% year over year—tallying a gross profit of $495 million.
So, why is Cash App so popular? In part, because it’s a convenient alternative to a bank account. When you sign up, you’ll get an account number and a routing number, which you can use to receive funds. You can send up to $1,000 in any 30-day period—and you can increase that limit by verifying your ID (as long as you’re over 18).
Cash App also offers a free debit card called the Cash Card, which you can use to pay for items in stores or withdraw cash at an ATM. Each cash withdrawal carries a $2 fee—but if your Cash App account receives more than $300 in paycheck deposits per month, Cash App will reimburse your ATM fees.
How Does Cash App Work?
You can use Cash App to pay friends, freelancers, utility bills, charities—almost anything, really. If you want to split the bill at lunch, simply:
- Open the app on your phone
- Choose the amount
- Enter an email address, a phone number, or a $Cashtag
- Indicate what the payment is for
- Hit “pay”
Cash App payments are instant, so recipients receive funds in seconds. If you receive a Cash App payment by accident and need to issue a refund, the refunded money will reappear in the accidental sender’s account straight away.
International payments, like domestic payments, are free. So, if you regularly send money to the UK or Europe, you can do so without incurring a fee—and that’s something you won’t get from PayPal.
Is Cash App Safe?
Generally speaking, Cash App is very safe. Cash App’s parent company, Square, uses the latest encryption and fraud detection tech to keep its customers’ money safe—the same technology it uses to keep Square Point of Sale transactions secure. In addition, Cash App is PCI Data Security Standard (PCI-DSS) Level 1 compliant.
In other words, Cash App is hard to hack—and if anyone does hack into your account, Square’s fraud detection algorithms should notice. Every time you sign into Cash App, you’ll get a single-use log-in code—and if you enable the Security Lock option, payments won’t go through without your passcode.
You do still need to beware of phishing and smishing attempts, though. Cash App, and Square in general, will never ask you to provide personal information—your Social Security number, your sign-in code or your PIN, for instance.
Requests for “test” transactions are also not legitimate. If you receive an email with a link attached, don’t click on the link—and don’t log in and give away any of your information, no matter how convincing the landing page.
Cash App Alternatives
Cash App isn’t the only money-moving option out there. Alternatives include Venmo and Zelle, which we’ll compare in the table below.
|App name||Cash App||Zelle||Venmo|
|Parent company||Square||Early Warning Services||PayPal|
|Bank account needed?||No||Yes, but the app is still available if your bank doesn’t have built-in Zelle||No|
|Who can you pay?||Anyone—including friends, family, charities, contractors, and utility companies||People you trust, including friends and family members||People you trust, including friends and family members, and businesses|
|Can you hold a balance?||Yes||No—Zelle connects straight to your bank account.||Yes|
|Fees||If you use your CashApp balance, a debit card, or your back account, the service is free. There’s a 3% credit card fee, and instant bank transfers cost 1.5%. Standard bank transfers are free.||None—although some banks charge fees to use Zelle||If you use your Venmo balance, a debit card, or your back account, the service is free. There’s a 3% credit card fee, and instant bank transfers cost 1%. Standard bank transfers are free.|
|Limits||Send up to $250 per week, and receive up to $1,000 every 30 days. Verify your identity to lift those limits.||Speak to your financial institution to find out if there are limits associated with Zelle.||You get a $299.99 weekly limit when you sign up. To lift that limit to $4,999.99, verify your identity.|
Cash App Versus Credit Cards
If you don’t want to pay via app but also don’t like to carry cash around, credit cards are another convenient payment option.
If you decide to get a credit card, look for a low APR and if possible, go for a card with cash back rewards, points, or other perks. If you’re looking to transfer your balance, choose a 0% interest offer to cut the amount you pay over time. If you’re new to credit, on the other hand, go for a credit builder card to boost your score.
You can compare credit cards and find the right one for you at Credit.com. It’s easy—and it takes just a few minutes to apply.
Can Cash App Be Trusted?
Is Cash App safe, then? On the whole, yes, Cash App is safe—particularly if you switch on the Security Lock option. Cash App’s parent company, Square, uses encryption technology and fraud detection algorithms to keep consumers like you safe. Remember—never respond to phishing or smishing scams, and never share personal data like your Social Security number or your PIN.
Ready to take credit monitoring to the next level? In that case, sign up for ExtraCredit and protect your identity with Guard It. Guard It scans the dark web, sends proactive fraud alerts, and includes $1 million identity theft insurance for peace of mind.
This article originally appeared on Credit.com.