Cash App Vs. PayPal – Which Is The Better Choice?

by | Jul 16, 2020 | Personal Finance

If you are looking for a way to transfer and receive money for personal or business use, you might have wondered if you should use Cash App or PayPal. While both are popular, they’ve both got their pros and cons. You’ll want to know more about this before deciding which one to use.

Keep reading to learn how Cash App and PayPal work, the pros and cons of both, and the verdict on which one you should use.

How Does Cash App Work?

Cash App is an app that allows you to make and receive mobile payments. It was developed by Square Inc. in 2009. 

To use Cash App, you would download the app onto your phone. Then, you would enter your phone number or email to sign up. After confirming your phone number or email address, you’ll be asked to enter your debit card and create a Cashtag name. The Cashtag name will be your username that people can look up to send you money. 

You can also choose to link your bank account.

To send or receive money, you would input the amount you want to send or request, and click the “Request” or “Pay” button. You would then input the name, Cashtag name, phone, or email address of the recipient. 

Cash App vs PayPal - Cash App

How Does PayPal Work?

PayPal is a U.S. company with both an app and a website where you can send and receive online payments. It was founded in 1998.

To use PayPal, you can either sign up through the app or their website. You can choose to link a credit or debit card to your account or your bank account. To send or request money, all you have to do is click the “send” or “request” button and input the recipient’s email or cell phone number, and the monetary amount. 

The Pros And Cons Of Cash App

Now that you know how Cash App works, you’ll want to know the pros and cons so that you can compare it to PayPal.

Cash App Pros

The first pro for the Cash Back app is that there are no fees for receiving money. There are also no fees for sending money if you use a debit card or bank account. Additionally, the app is straightforward to use with a clean design.

Another pro of Cash App is that you can transfer money to your bank account within 1-3 business days without fees. You can also transfer the money instantly. Cash App also has a Cash App debit card that you can use, so you can make purchases directly from the debit card. This gives you versatility in how you want to receive your money and how quickly you can use it.

Additionally, Cash App has some additional features that make it stand out. For one, they have a referral program where you get $5 for getting someone to sign up. The person who signs up also gets $5. Therefore, you can even make money from using Cash App! 

They also offer cashback deals for shopping at places. For instance, you can get 10% of Chipotle or $1 off any coffee. However, what’s great about the Cash App is that you’ll get that cash back instantly on your Cash App debit card. Therefore, you don’t have to wait weeks or months to receive payment as you might with a typical cashback app. 

Lastly, you have the option of investing in stocks and buying bitcoin. You can buy bitcoin through the app, and the money will show up instantaneously on your Cash App debit card and account. Typically, when you buy bitcoin through an app specializing in bitcoin investing, like Coinbase, you’ll have to wait 2-3 business days for the money to transfer. Using Cash App is one of the simplest and easiest ways to buy bitcoin. 

Cash App Investing

Cash App Cons

The cons with Cash App are mainly associated with the fees. For one, if you want to send money with a credit card, the app will charge you a 3% fee. Additionally, although you have the option of an instant deposit to your bank account, the cost for this is 1.5% of the transaction amount. Therefore, you want to avoid racking up too many fees because it can add up. 

You also cannot put cash on the card. You have to transfer money from your bank account to the debit card. Some people find this deceiving because the name of the app is “Cash” App. 

Lastly, you cannot make international transfers of money. Only people from the U.S. and the U.K. can transfer money to each other. If you run a business and need to send and receive money internationally, Cash App probably isn’t for you.

The Pros And Cons Of PayPal

Now that you know all about Cash App, it’s time to learn about the pros and cons of PayPal.

PayPal Pros

For one, PayPal is easy to use. Additionally, there are no fees for sending money as long as you send it to friends and family via your bank account or funds from your PayPal. There are also no fees if you receive money from friends and family when they send money using their bank account or PayPal balance. 

Cash App vs PayPal - How Does PayPal Work

Again, you have the option of instant pay, a PayPal debit card, or you can transfer the money to your bank account without fees in 1-3 business days. The fee for instant payment is only 1% compared to the 1.5% that Cash App charges.

Cash App vs PayPal- PayPal Tips

Additionally, PayPal allows you to transfer funds internationally amongst more than 200 different countries.

Lastly, PayPal is safely encrypted and protects your data to a higher level.

PayPal Cons

Again the main cons with PayPal are associated with the fees. While transferring money from your PayPal to your bank account might be free on the PayPal end, some banks will charge an electronic transfer fee if they see the transfer is coming from PayPal. 

Additionally, PayPal might be free for personal use, but that’s not the case for business use. As a business, you will be charged 2.9% and $0.30 when you receive money for goods or services. If you want to receive money internationally (for business use), you’ll be charged a 4.4% transaction fee plus a fixed fee based on the currency received.

The Verdict: Cash App vs. PayPal

Overall, I’d say Cash App is the winner for personal use. If you want to send or receive money to your friends, it’s easy to use and has other features like the cashback deals and bitcoin buying that make it stand out against PayPal. 

However, if you are someone who needs to make transfers internationally (for personal use), or you like the idea of sending instant deposits to your bank often, go with PayPal.

For businesses, PayPal is your better option between the two, even though there are fees involved with receiving payments. That’s because PayPal offers better safety features, such as dispute resolution and payment protection. 

The Bottom Line

There are pros and cons to both PayPal and Cash App, and one isn’t automatically better than the other. It depends on what you want to use them for, but overall, Cash App does have more features available to you for personal use. However, PayPal is generally better for businesses because you can use it to accept payments on your website or blog and handle a larger volume of payments. Lucky for you, you can use both!

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<span style="font-size:12px;font-weight:500">Author</span><br><a href="" target="_self">Emilia</a>


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