Cash App vs PayPal – What’s Best For Sending & Receiving Money?

Whether you’re running an online business or going out with friends, there will come a time when you need to send or receive money.

While cash may be useful to carry around, platform likes Paypal have made it easy to send/receive money to the exact penny without the need to exchange cash.

Although Paypal is the most common app for money transfers, plenty of other apps have grown in popularity by suiting specific needs for the average user.

Cash App, one of the “newer” apps in this space has continued to grow in popularity for its ease of use and sleek design.

If you are just getting started in using money transferring apps and aren’t sure which one to use, stick around for this Cash App vs Paypal comparison!

We’ll be discussing what each of them do, pros and cons, and why one might suit you better than the other.

We’re also going to break down the fees for each platform so you know how to avoid fees and maximize savings.

Let’s dive in!

What is Cash App?

Cash App, founded in 2013, is a mobile payment app created by Square Inc that allows you to easily send and recieve cash from people you know.

The company recorded over 30 million monthly active users in 2020 and has been growing exponentially in the last few years.

In fact, the app is currently the #1 Finance app for IOS and has more than 10 million installs for Android.

Platforms like PayPal are admiteddly pretty antiquated, so Cash App’s advantage is that it’s sleek, intuitive, and designed for the modern world.

Cash App consists of 5 main categories on their home menu:

1. Banking.
2. Cash Card.
3. Request & Pay.
4. Investing.
5. Activity.

However, despite the simplistic design, Cash App lets you to do much more than just transfer money!

Here’s how you can make the most out of each Cash App feature:

Banking – Lets you treat Cash App like a checking account to hold your cash and even Bitcoin. You can also deposit/withdraw money from another bank account or with the next feature:

Cash Card – This is a free debit card created by Square Inc that offers cool discounts such as $1 off every coffee shop you visit or Lyft ride you take. It comes in a modern design and works well with the banking section of the app.

Request & Pay – This is the main section of Cash App. Like PayPal, this section is where you can type in any amount and send it to (or request it from) anyone who provides you with their Cash App name.

Investing – If you want to start investing, you can actually use Cash App to invest for free. The minimum amount to invest is only $1 and you can even buy fractional shares. Not to mention, their layout is extremely user friendly and easy to use for beginners.

Activity – This tab shows you your recent transactions with the name of the person and amount included in the transaction. It also shows you if you’ve cashed out or added a new friend on the app.

Admiteddly, Cash App’s strength is that is makes it easy to send and recieve money from anyone, almost instantly.

However, the Cash Card is also a distinct feature that deserves a highlight.

With this free debit card, you can truly make the most out of your Cash App account and score freebies at grocery stores, general retailers, online purchases, restaraunts, and more!

Admiteddly, while the investment features are nice, if you’re serious about investing, you’re better off looking into platforms like M1.

Extra Reading – The 18 Best Reward Apps.

What is Paypal?

Paypal, founded in 1998, is an online payment system for personal and business use that allows you to transfer money, cash checks, support charities, and more.

The platform has over 300 million users as of 2020, and I’m sure you’re familiar with PayPal if you’ve ever sent or recieved money online.

Just to give you an idea of PayPal’s size…If Paypal were a bank, it would be the 21st largest bank in America!

Plus, Elon Musk was one of the founders of Paypal, and we all know how amazing Elon is.

Anyway, Paypal consists of 4 main categories on their home menu:

1. Scan/Pay.
2. Send.
3. Request.
4. More.

While 1-3 are virtually the same thing, the “More” section has plenty of neat features:

• Send money abroad.
• Start a money pool with friends.
• Support a charity.
• Get deals and offers.
• Add/Get cash at a store.
• Cash a check.
• Setup direct deposit.
• Get Paypal cash card (their version of a debit card).
• Earn rewards when you shop in store.

Clearly Paypal has a lot of options for whatever needs you may have. Plus, if you sign up for the business account, there are even more features that allow you to set up payment easily.

How Does Cash App Work?

The process to get started with Cash App is very simple, which is why the platform has found such success.

Here is how to setup a Cash App account:

1. Download Cash App onto your mobile device.
2. Sign up with an email or phone number.
3. Confirm you information.
4. Enter a debit card for sending/receiving money.
5. Create a Cashtag name (username on Cash App).
6. Link a bank account (optional).

That’s it! Once you have those steps completed, you can start using Cash App to its full extent.

When you receive money, you’ll see the amount at the very top of the home screen.

From there, you can choose to withdraw the money to your bank account or keep it in Cash App for future transactions.

On top of that, you can refer your friends and you’ll each get $5 just for signing up with Cash App!

How Does Paypal Work?

Paypal is incredibly easy to get started with, especially since they let you know if you’re missing any information along the way.

Here is how to setup a Paypal account:

1. Download Paypal onto your mobile device.
2. Signup with name, email, password, phone number, etc.
3. Link a debit or credit card for money transactions.
4. Link a bank account for withdrawals.
5. Verify your information.

Simple as that! Setting up a business account is very similar. It just includes a few more pieces of information for legal business transactions.

When you receive money, it will show up at the top of your home screen with an option to accept the payment.

From there, you can either transfer it to your bank or keep it in Paypal to shop with or send in the future.

Fees –  Comparing Both Platforms

While sending/requesting money to a friend is completely free with a debit card on both platforms, some small fees may show up depending on the type of transaction.

It’s important to consider fees for any payment exchange platform you use because they really can sneak up on you.

If you aren’t careful, you might rack up hundreds of dollars in fees each year if you use either PayPal or Cash App frivolously.

Cash App Fees

Let’s take a look at Cash App’s fees:

• Sending Money – Charges 3% fee of total amount with a linked card.
• Instant Transfers – Charges 1.5% of transfer amount.
• ATM Fees – Cash Card use at any ATM is $2 fee per use. You can get free ATM withdrawals if you deposit at least $300 per month into your Cash App account.

However, sending money with a linked debit card or bank account is free with Cash App.

Additionally, there aren’t international payment fees for sending or requesting payment outside your region with Cash App, which is massive!

This is because Cash App “uses the current mid-market exchange rate for international payments, which is determined by the current “buy” and “sell” rates with no additional fee included by Cash App.”

However, Cash App only supports payments between the U.S. and UK at this time, so this isn’t as good as you think.

As long as you’re patient and don’t use your credit card or opt for instant transfers to your bank, you shouldn’t encounter too many fees.

PayPal Fees

Now let’s take a look at Paypal’s fees:

• Instant Transfers – Charges 1% of the transfer amount, up to $10.
• U.S. Payments – Paying with a credit card, debit card, or Paypal credit chages 2.9% fee of total amount.
• Foreign Transactions – Sending money to other countries charges 5% of the transfer amount.

You can see the full range of fees here for specific countries and selling accounts.

PayPal is generally more expensive to use than Cash App, although instant transfers are cheaper.

Additionally, there are some nifty tricks you can use to avoid PayPal fees, such as marking payments as “for friends and family” to avoid paying fees altogether.

If you use either one of the apps casually, you can almost completely avoid all fees by linking a bank account and being patient on withdrawals.

Ultimately, if you’re planning on using the apps for more than just sending some money to friends and family once in a while, take a good look at the fees and see which one works better for your situation.

How Do You Send and Receive Money?

To send and receive money on Cash App, follow these simple steps:

1. Enter the monetrary amount.
2. Select “Request” or “Pay.”
3. Enter the name, Cashtag, phone number, or email of recipient. Every user has a unique Cashtag, but you have enough options to make sending money a breeze.
4. Tap “Request” or “Pay” again at the top right corner.

If you’re unsure if the money was actually transferred, you can always check the “Activity” tab and see if the transaction went through.

To send and receive money on Paypal, follow these easy steps:

1. Select “Send” or “Request” at the bottom of the screen.
2. Type in the name, email, or phone number of recipient.
3. Enter the monetary amount.
4. Choose if it’s a purchase or being sent to a friend.
5. Tap “Send” or “Request” again to complete purchase.

You can view your recent activity on the home screen to double check if the transaction actually went through properly.

Pros and Cons of Cash App

If you’re considering using Cash App for your mobile transactions, here’s a quick pros and cons list of using Cash App:

Pros

Cash App has grown in popularity because it’s a modern solution to sending and recieveing money with your smartphone. Plus, there are some significant pros to consider:

• Incredibly simple design and ease of navigation.
• Includes extra features (investing, cash card, banking, bitcoin, etc.)
• Easy to avoid fees and instantly send money to friends and family.
• $5 Referral bonus for inviting friends.
• Opening a Cash Card lets you pay online and in-store with your Cash App account, and you can also get instant discounts through boosts!

Plus, Cash App’s beauty is that you just need a Cashtag or name and email to send money, making it incredibly easy to use while on the go.

Extra Reading – The Best Cash App Hacks.

Cons

Despite Cash App’s popularity, there are a few downsides to consider as well:

• 3% fee for sending money with a credit card.
• 1.5% fee for instant transfers to your bank account.
• Lackluster investing features compared to zero-fee brokerage accounts.
• You have a $1,000 send/receieve limit for any 30-day period unless you verify your identiy with Cash App.
• Cash App isn’t FDIC insured, meaning you shouldn’t store a massive amount of money in your account. Cash App also lacks buyer protection, unlike PayPal, so I wouldn’t use Cash App to sell stuff online over PayPal.
• Only works in the U.S. and the UK.

Most of the cons are valid, but keep in mind that you can avoid all fees by linking a bank account and not choosing instant transfers on withdrawals.

Pros and Cons of Paypal

If you’re considering using Paypal, here are the pros and cons to determine which mobile app is best for you:

Pros

There are multiple reason why PayPal has established itself as one of the most popular ways to send and recieve money online:

• Distinct personal and business account options.
• Quick sending and withdrawals.
• Easy to avoid fees for personal use, especially if you use the Friends & Family feature.
• Additional features (Paypal card, cashing checks, discounts, sending abroad, etc.)

Cons

Despite its popularity, PayPal has several distinct drawbacks.

• Lots of business account fees.
• 1% instant transfer fee.
• No investing, bitcoin, referrals, or real banking features.
• 5% fee for sending money abroad.

Plus, PayPal has a variety of international transfer fees and exchange rate fees, which can really rack up if you get paid in one currency but deposit it into a bank account with a different currency.

While Paypal may have a lot of fees, personal accounts are equivalent to Cash App in terms of just sending and receiving money. Plus, Paypal is the only one that even includes a business account.

Update – PayPal Adds The PayPal Cash Card

I wanted to update our PayPal vs Cash App showdown since PayPal has recently released its cash card, which helps you avoid fees and spend your PayPal balance more easily.

This card is essentially a debit card that draws funds from your PayPal account. You can shop with the PayPal cash card anywhere that accepts Mastercard.

Other perks of this card include:

• No monthly fees
• No credit check
• No minimum account balance requirements
• Zero transaction fees

PLUS, you can withdraw money at over 32,000 ATMs worldwide without paying fees.

Honestly, if you’re wondering: is PayPal better than Cash App, I’d say this is one step towards PayPal winning the argument.

Cash App is still easiest to use for friends and family to send and receive money pretty casually.

However, I think the PayPal cash card just made the platform more useful for individuals looking to shop without having to worry about transaction fees.

The Verdict – Which One Should You Use?

To truly compare Cash App vs Paypal, you have to compare their features to what your needs are.

Are you going to need a business account?

If you answered yes, then you almost have to go with Paypal since they’re the only app between the two that have distinct business features.

Plus, PayPal works in more countries, and as long as you’re alright with the foreign transaction fees, it’s a fairly convenient way to send or recieve money from around the world.

However, if you’re looking for a casual way to send and receive money between friends and family, I’d recommend going with Cash App.

You might find an appreciation for how incredibly easy it is to navigate through Cash App, whereas Paypal can drive your head a little crazy at times.

Plus, if you want to sign up for a Cash Card and make use of boosts, you can earn some free money and rewards along the way.

As a word of caution, however, I’d check out this Reddit thread that talks about Cash App.

It seems like some users have been buned by keeping large amounts of cash in their accounts, and again, Cash App isn’t FDIC insured.

Is Cash App better than PayPal, or vice versa?

Well, I think that really depends on the reason you need to send or recieve money and what your goals are.

Ultimately, I think the lack of FDIC protection drives home the point that you should use Cash App to send small amounts of money between friends or for simple everyday purchases (for Boosts).

If you run an online business or are serious about making money online, PayPal is a better option.

Thanks for reading our Cash App vs PayPal showdown! If you have a favorite platform, let us know in the comments!