Financial Fitness


Sending payments through your phone

Posted at 6:33 AM, Jul 10, 2015

Remember those funny green rectangles that you used to exchange for goods and services? Those dead Presidents are dying off.

The last refuge of cash is transactions between individuals, where credit and debit cards do not make any sense. A series of apps are chipping away at that last cash realm by allowing people to transfer money electronically to each other — otherwise known as peer-to-peer (P2P) payment. PayPal has been in the field for some time, but Venmo, Square Cash, and Google Wallet are all competing for your P2P transaction business. Even Facebook will be entering the fray soon with the ability to send money through its Messenger app.

Let’s take a look at the current contenders, all of which run on both iOS and Android systems.

PayPal – PayPal is the longest-established option, with many familiar users via the eBay connection and an established record overseas. Create an account and link to your preferred method of payment and transfer. Credit and debit cards are charged a 2.9 percent fee plus a 30-cent transaction fee, but bank account transfers are free.

If both parties have PayPal accounts, simply use the “Request Money” tab and you will be prompted to fill in the necessary information. You can place/maintain a balance in your PayPal account to pay others, or accept payment into your account and transfer to your linked bank account at any time.

Venmo – A newsfeed, similar to Facebook, makes Venmo different from all the other options. Part payment system and part social media outlet, Venmo is popular enough that it has become a verb to younger users. We will not be surprised if “just Venmo me” becomes an advertising campaign.

After downloading the app, you will need to set up an account. Add your banking information of preference — credit card transactions cost 2.9 percent while debit cards and bank account transfers are free. Add friends to create a network through which you can send or receive money.

Money passes into your Venmo account in a way similar to PayPal and is held there for payments to your Venmo friends. To bring your funds out of Venmo you “cash out” into your bank account. Transfers take place within one business day and limits are $300 per week or $2,999 with ID verification; weekly cash out limits are $999.99 without ID verification and $19,999 with.

Keep in mind that Venmo can make your transactions public; if you prefer privacy, make sure you select that option for transactions.

Square Cash – Square Cash is based solely on debit card transactions. Its advantage is that an account is not required. Simply send your debtor an e-mail with the amount to be paid, along with any other information you want to include and CC the address You will both receive a secure link to enter banking information. The transfer takes place within 1–2 business days. Transfer limits are $250 per week or $2,500 with ID verification.

Square Cash is perhaps the easiest to use but there is one concern that the other options do not have — make sure your debtor understands Square Cash or they are likely to assume the e-mail is a scam.

Google Wallet – Google Wallet is as much a money management system, including gift and loyalty cards, as it is a payment method. It allows you to attach payments to any Gmail message by using the dollar sign symbol in the toolbar. Both parties need Google Wallet for the transfer to take place. Transfers may take up to three days; limits are $10,000 per transaction or $50,000 per any 5-day period. Debit and credit card transactions incur a 2.9% fee, but bank transfers are free.

All four apps address security by maintaining compliance with the Payment Card Industry Data Security Standard (PCI DSS) and offer 24-hour services for fraud/protection issues. All four use either PINs or security codes to allow transactions. However, it is wise to limit the use of these apps in public, unsecure places.

There may be a simpler alternative to all of these apps if both parties in the transaction use the same bank. Larger well-established banks have their own apps for online banking and those portals typically allow you to transfer funds directly to another account within the same bank. Funds are usually available within 24 hours, and transfer limits will vary by bank. You will need to initiate the transaction as the sender and may need account information.

As a rough distinction: Venmo appeals to those who like the social media aspects, Square Cash’s appeal is in convenience and simplicity, PayPal is well-established and works around the world, and Google Wallet appeals to those who like the associated money management extras. Check out all of the P2P payment apps available to see which one is right for you.

However, you may still want to keep some of those funny green rectangles around just in case. Systems do go down on occasion, and believe it or not, there may be an occasion when you are stuck without your phone.


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