Personal Finance

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

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 having a Cash App account and a PayPal account is 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 for money transfers, the pros and cons of both, and the verdict on which one you should use.

How Does Cash App Work?

Cash App is a money mobile app that allows you to make and receive mobile payments with instant transfers to other Cash App users. It was developed by Square Inc. in 2009 and you can use it to withdraw money just like Google pay and Apple Pay cash apps. 

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. 

Cash App users can also choose to link their bank accounts.

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. Other payment options available with Cash App are debit or credit card payments, Google Pay or Google Wallet, Apple Pay, and Cash App Balance.

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 and make online purchases. It was founded in 1998.

You can either sign up through the app or their website to use PayPal. You can link a credit or debit card to your account or your bank account. Then, 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 to send or request money. 

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 advantage of the Cash Back app it does not charge fees for receiving money. There are also no Cash App fees for sending money if you use a debit card or connected 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 funds instantly. Cash App also has a Cash App debit card that you can use to 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. 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 cashback 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 to family members or pay friends, the app will charge you a 3% minimum 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 they can add up. 

You also cannot put cash on the card. Instead, you have to transfer money from your bank account to your debit card. Some people find this deceiving because the app’s name 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. So if you run a business and need to send and receive money internationally, Cash App probably isn’t for you.

However, we should point out that Cash App’s card is good for paying online and in-store when traveling abroad and the app does not charge you foreign transaction fees.

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 Credit.

PayPal App helps you process and collect payments whether you are using a business account or a personal account. You can make in-app purchases and debit card transfers. While its services are not completely free most people prefer PayPal to pay online.

PayPal Pros

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

Cash App vs PayPal - How Does PayPal Work

Again, you have the option of instant payments, a PayPal-linked debit card, or you can transfer the money to your bank account without fees in 1-3 business days. The price 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 among more than 200 different countries.

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

PayPal Cons

There are a few downsides to using this payment method. The main cons with PayPal are associated with the fees. While transferring money from your PayPal to your bank account might be accessible on the PayPal end, some banks will charge an electronic transfer fee if they see the transfer is coming from PayPal. 

Additionally, PayPal accounts might be accessible for personal use, but that’s not the case for business use. You will be charged 2.9% and $0.30 when you receive money for goods or services as a business. 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 international payments (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, and PayPal purchase 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!

Do you need alternatives to Cash App and PayPal or looking for other apps for making money? If so, read our guides on the best alternatives to PayPal and the best apps to make money.

Kevin Martin

Kevin is an ambitious entrepreneur that is obsessed with all things related to finance. From a young age, Kevin has always been involved with side hustles ranging from online selling to freelance work. Over the years, Kevin graduated from side hustles and started launching multiple online and offline businesses. Kevin is a serial entrepreneur who loves starting new businesses and exploring all things related to business and finance. He is constantly looking for new ways to save money, invest money, and create income streams.

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