What Is Cash App?

What is Cash App ? (photo: i.insider.com)

Cash App is a rapidly growing peer-to-peer payment service. In 2020, Cash App generated a revenue of $385 million, which is a 212% increase from the previous year.

According to Ray Kimble, the founder and CEO of security company Kuma LLC, Cash App is a formidable option for exchanging money and its various features. It is similar to Zelle, Paypal, and Venmo.

A growing number of Americans are relying on computers and smartphones for their banking activities. It is predicted that approximately 65% of Americans will be banking online by 2022. If you're in search of a payment app, Cash App could be a good option, but it has some drawbacks that should be considered before signing up. Here is a comprehensive guide to understand Cash App before making the decision to use it.

What Is Cash App? 

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Cash App is a money transfer service that focuses on mobile app usage. Users can send and receive money quickly, similar to PayPal and Venmo. However, Cash App offers additional features as well.

In addition to money transfer, Cash App provides its users with a bank account and debit card that can be used at any ATM. The app also allows users to invest in stocks and Bitcoin. Some of these services are free, while others carry a fee. It is important to note that the Cash App balance is not insured by FDIC, meaning there is no guarantee that users will get their money back in case of any problems.

Cash App was established in 2013, originally under the name Square Cash, referencing its parent company, Square Inc. Square Inc. was co-founded by Jack Dorsey, the creator of Twitter.

How to Sign Up for Cash App

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Creating a Cash App account is a fast and simple process.

To start an account, all you need is your name, ZIP code, and either an email address or phone number. While it is not required to link a bank account to open a Cash App account, it is necessary to do so in order to fully utilize the app's features.

HELPFUL HINT - You can raise your monthly limits for sending and receiving money by fully verifying your Cash App account.

Once you have opened your Cash App account, you will create a unique username called a "cashtag" ($Cashtag). This will allow others to find and send payments to your account within the app. You also have the option to receive a free Cash App debit card, which will be mailed to you. The debit card is linked to your account balance and can be used anywhere that accepts Visa. 

However, if you use the card at an ATM, there is a $2 fee charged by Cash App. But, if you have a monthly direct deposit of at least $300 from your paycheck, Cash App will reimburse the $2 ATM fee. Keep in mind that your money is not FDIC insured, so there is no protection if something goes wrong.

How To Send and Receive Money

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The Cash App interface is very straightforward, making it effortless to send and receive money. To send funds, you can locate the recipient using their name, phone number, or unique username ($Cashtag) within the app. After sending the money, the recipient will receive either an email or text message notification. They have the control to determine the speed of the transfer.

In order to receive funds, you can initiate a payment request. This request can be initiated through the recipient's name, $Cashtag, email, or phone number. Once the payment has been processed, you will receive a notification from the app. After that, you can select the desired speed at which you want to receive the funds.

The Cash App offers the option to transfer money received into your bank account or linked debit card. The deposit into your debit card happens instantly, however, it may take up to three days for the deposit to appear in your bank account. It's important to note that both types of deposits are fee-free.

If you prefer to have an immediate deposit into your bank account, a 1.5% fee of the total amount will be applied, with a minimum fee of $0.25.

Cash Limits

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With the Cash App, you can send a maximum of $250 within a 7-day period and receive up to $1,000 within a 30-day period. If you wish to increase your sending and receiving limits, you will need to undergo further verification of your identity through the service.

To complete the identity verification process, the Cash App will request your full name, date of birth, and the last four digits of your Social Security number.

With the Cash App, you can open an account without having to meet a minimum balance requirement. There is no advertised maximum balance limit for a Cash App account. The minimum amount you can send or receive is $1, and there is no service fee or monthly charge for maintaining a balance in your Cash App account.

Read More: What is Bitcoin ? How to Mine, Buy and Use It

How Secure Is Cash App?

"Cash App adopts the PCI-DSS protocol, which is the same security standard used by major credit card companies. Payments are encrypted at both the sender and recipient end, making it just as secure as using a credit card," according to Farah Sattar, computer engineer and founder of DCRYPTD.

However, it's important to note that the Cash App balance is not FDIC-insured. This is a drawback of the service and something to consider when opening an account.

Cash App enables you to invest in stocks and Bitcoin. However, if you plan to use it for investing, it might raise some concerns. Cash App is a registered broker-dealer and is a member of FINRA and SIPC. Ryan Shuchman, an investment advisor and partner at Cornerstone Financial Services, suggests that Cash App might be a suitable option for a beginner investor.

However, Shuchman points out that Cash App also has drawbacks for investors. According to Shuchman, the platform does not provide mutual funds and does not support trading in options or other advanced investment products. Additionally, Cash App has limited analytics and research capabilities, making it an unsuitable choice for larger and more sophisticated investors.

Should You Buy Bitcoin on Cash App?

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Apps such as Cash App, Venmo, and Robinhood have made it simpler than ever for people to purchase Bitcoin and other cryptocurrencies, however, there are valid reasons to exercise caution before making any investments. 

Cryptocurrency is a relatively new asset class compared to conventional stocks, which results in its high volatility and substantial price fluctuations on a daily and even hourly basis. It is advised to limit your cryptocurrency investments to no more than 5% of your portfolio and ensure that it does not interfere with your emergency savings or paying off high-interest debt.

Additionally, while apps like Cash App are known for their user-friendliness, mainstream cryptocurrency exchanges offer a wider range of features and top-notch security measures to safeguard investors' cryptocurrencies.

Scams Protection

Cash Application resettlements are secured, most resettlements are made immediately, and usually the resettlements cannot be terminated once the cash is sent out. This definitely fallen leaves room for scams and various other criminal offenses of social design.

"3rd party applications such as this, although they may be PCI-DSS certified and secure all their information, still put the obligation on the user to earn certain they use solid security and personal privacy methods for protecting their account," says Kimble.

Sattar also keeps in mind that Cash Application users can be vulnerable to some forms of cybercrime, because of the electronic nature of the payment solution:

"As with any internet-based technology, Cash Application is vulnerable to sniffing assaults. For instance, if someone declaring to assist you asked you to share your screen, don't do it. Anybody qualified to assist will stroll you through the actions without ever requesting a display share or login qualifications," says Sattar.

Bottom Line

Cash Application is an useful solution for sending out and receiving money. Transfers are fast and easy, and the included bonus of having the ability to spend and use a debit card with the solution makes it a great device in the electronic age.

However, your balance on Cash Application isn't FDIC-insured, which means there is no guarantee you will obtain your cash back if the company obtains hacked and points go southern. Cash Application probably isn't a smart idea as a financial institution substitute. But it is helpful for moving small amounts immediately and securely.

Read More: How to save money

Source: https://time.com