With peer-to-peer payment services like Square Cash, Venmo, and PayPal there’s no need to carry cash anymore. These mobile apps make splitting checks, paying friends back, and lending money to family members as easy as tapping your finger. Let’s look at them, and decide which one rises above the others.
Availability
Square Cash, Venmo, and PayPal each have free apps for iOS and Android devices. Signing up for each service is quick and free, and you only need a connection to a data or Wi-Fi network to use them. Square Cash is available to residents of all 50 U.S. states, but no U.S. territories at the time of this writing. You must also be 18 years old and within the U.S. to use the service. Venmo is also available in all 50 U.S. states. PayPal, on the other hand, is available worldwide in over 200 markets and 26 currencies.
Fees and Limits
Signing up for all three services is free, and so is downloading their respective apps, but each service has different fees to send and receive money that you should be aware of.
Square Cash transactions are free, but only for linked debit cards. Credit cards can now be used with the service, but there’s a 3% fee per transaction. You can’t connect directly to a bank account like you can with Venmo and PayPal, however, or keep a balance within Square Cash itself. You’ll also have a $250 weekly money sending limit and $1,000 receiving limit per 30 days to start. If you attempt to send more than $250 in one week or receive more than $1,000 within 30 days, you’ll be asked to verify your identity with name, date of birth, and the last four digits of your SSN. Once you’re verified, free transactions are then limited to $2,500 a week and there are no limits on how much money you can receive.
Venmo transactions are also free if you use your linked debit card, linked bank account, or current Venmo balance. If you want to use a credit card you’ll get hit with a 3% fee just like Square Cash. Venmo’s transaction limit is different than Square Cash’s, however. You’re limited to $299.99 per week unless you verify your identity by linking your Facebook account or adding your ZIP code, last four digits of your SSN, and birthdate, which ups your limit to $2,999.99.
PayPal’s transactions to or from your bank account or current PayPal balance are free, but debit and credit card transactions will incur a 2.9% (plus 30 cents) fee. If you wanted to pay someone with your debit card account and avoid the fee, you’d need to deposit funds into your PayPal account with your debit card, and then transfer those funds to your recipient. PayPal, however, has no weekly transaction limits in place.
Using Each Service
The Square Cash, Venmo, and PayPal apps all let you do pretty much the same thing: pay or request money from others via name or mobile phone number. You can do this within the app, via email, or via web browser. Each service has its own quirks, however.
In addition to the basics, Square Cash lets you send and receive money with “$Cashtags.” Your $Cashtag is a unique screen name that lets you pay and get paid anonymously. Claiming a $Cashtag isn’t required to use Square Cash, but it’s the easiest way for non-Square Cash users to pay you. All they have to do is go to Cash.me/ [your$Cashtagname], sign in if they have a Square Cash account or enter their credit or debit card if they don’t, enter the amount, and click Pay. Once you have a debit card linked with your Square Cash account, payments will usually transfer instantly. Some payments, however, can take up to two days to fully transfer over.
Venmo and PayPal work similarly to Square Cash when it comes to using their apps, but differently when it comes to how they handle your money. Venmo and PayPal keep money sent to you as a balance in a dedicated account instead of placing that money directly in your bank account or crediting your debit card. For example, if someone sends you $20 as your first Venmo transaction, it will get added to your Venmo funds and make your balance total $20. If you then decide to send your awesome friend Patrick $10 to pay him back for lunch, Venmo will use $10 from your available balance, leaving you with $10 in your Venmo balance. If you needed that $20 in your actual bank account, however, you’d have to take the extra step of withdrawing your Venmo funds. The same goes for PayPal. Venmo and PayPal transactions are instant if the sender is using banked funds, but withdrawals to your bank account can take up to two days with Venmo and three to four days with PayPal.
Venmo also differs itself from the others with a newsfeed-like setup of all you friends’ most recent transactions. You can even comment on or like listed transactions if you want. When you make transactions, the other folks in the Venmo community (Facebook friends and random people) can also see who you paid and why (not the amount). For many, the added social element of Venmo is a little much, but you can always verify your account without Facebook, or choose to keep individual transactions private. If anything, the Venmo transaction feed is a great place for jokes (“Patrick Allan paid Johnny Hammersticks: original copy of Star Wars Holiday Special”).
PayPal has a few edges on the competition due to its size and global status. You can send money to almost anyone in the world (in 25 different currencies), but Venmo and Square Cash are stuck sharing cash in the states. PayPal also allows individual transactions of up to $10,000, which is more than the weekly limit of both Square Cash and Venmo combined. If you’re going to be moving a lot of money between you and your inner circle, PayPal is where it’s at. PayPal’s major downside, of course, is the fee for paying someone directly with your debit card instead of your PayPal funds or bank account, and the sender decides who pays the fee.
Security
Square Cash, Venmo, and PayPal are all compliant with the Payment Card Industry Data Security Standard (PCI-DSS) Level 1, which are the same security standards created and upheld by companies like Visa, MasterCard, and American Express. That means that information sent to each company’s servers should be encrypted and sent safely, and each service has 24/7 fraud and risk protection in place. While no digital transactions are 100% safe, your transactions with all three of these services are about as safe as using your debit or credit card at the grocery store (which, again, is never 100% safe).
It should also be mentioned again that Venmo attempts to make money transactions a social endeavor. While it’s not necessarily a security risk, it’s certainly not very private. The web site Vicemo, for example, shows you a collection of all the publicly available Venmo transactions involving buying drugs, alcohol, or sex. If you make public transactions, literally anyone will be able to see them. If you go with Venmo, you may want to consider avoiding the social aspects of the service by making all of your transactions private (or by using Square Cash or PayPal instead). Considering the fact that linking your Facebook account is one of the ways to verify your Venmo account, it’s something worth keeping in mind.
The biggest threat to your financial security with any these services, of course, is someone having physical access to your phone or tablet. Fortunately, you can require a PIN to open and use the Venmo and PayPal apps (in addition to your phone’s security code). Venmo and PayPal also both offer two-factor authentication via SMS text message. Square Cash doesn’t have either of those options built in yet, but you can set it up to ask for your debit or credit card’s security code for every transaction, or have a text message sent to you every time a transaction is made with your account. If you’re on iOS and have a iPhone 5s or later, however, you can use Apple’s Touch ID for an added level of app security with all three services. If we had to pick which one of these services is the “most secure,” it would probably be PayPal (since it’s basically a full-on international bank), and we’ve explained why in the past.
Bottom Line: Venmo for Social Spenders, Square Cash for Anonymous, Simple Transfers, and PayPal for the Most Reach, Currencies, and Options
If you’re looking for a P2P money service that fits you, it’s not hard to do. Square Cash, Venmo, and PayPal each have their own great qualities:
If you want to make money transactions simple, social, and fun, go with Venmo.
If you want to transfer money to friends and family all over the world, or want an all-in-one money service, go with PayPal.
If you want the simplest money transferring option for friends and family, or to easily transfer money anonymously, go with Square Cash.
When it’s all said and done, however, you’re probably better off using whatever service most of your friends and family use—it’s just easier that way. Of course, there’s no rule that says you can only use one service. PayPal has the major added bonus of letting you buy things from retailers and other businesses in addition to being a solid money transfer option. My friends and I all use Square Cash for paying each other back, but I use PayPal for plenty of other things too (okay, mostly ordering food). Each service is better at different things, but that just makes them each great tools to have on your financial tool belt.