If you’ve never used money transfer apps, now is a great time to get started. These apps make it easy to split payments in restaurants, transfer money to a friend or coworker (you are contributing to Jerry’s retirement gift, right?), or even pay for everyday items. They’re also the fastest and most convenient way to transfer money over distance, with some payment apps even handling international transfers.
Despite their benefits, getting started with cash sharing apps can be intimidating. You may wonder how to use them, whether they are really safe, or how to set them up. You may even be overwhelmed by the number of payment apps on the market to choose from. If this sounds like you, then you’re in the right place. Here’s the lowdown on money transfer apps, courtesy of the TracSoft team you trust.
How Do Money Transfer Apps Work?
Getting started with money transfer apps is easy. Depending on the app, you will either move a set sum of money to the app, or you will link your bank account to the app of your choice. It’s easy, and most popular apps are free if you connect your bank account or debit card (some companies charge fees to use credit cards with their app). Once connected, you can begin enjoying contactless payments through your smartphone.
You may wonder how money transfer apps make money if they’re free for you to use. Often, the companies that operate these apps, known as peer-to-peer (P2P payment services), charge businesses small, per-transaction fees to use their service. Businesses will pay these fees because they know accepting payment this way attracts customers, who want easy, contactless payment options. P2P companies also charge users fees for some services like expedited transfers or credit card payments. And some P2P services are now offering users add-on options they charge for, such as investing or buying Bitcoin through their app. Charges for these services are lucrative for P2P companies.
What Is The Best App For Transferring Money?
The best money transfer app for you will depend on how you plan to use the app and who you’ll be sending money to. You should also consider key features such as phone/app compatibility, limitations on how much you can send, how frequently you can send money, and charges to send or receive money. Below is a list of some of the most popular payment apps in 2020, with a round-up of their best and worst features, so you can decide which app is right for you.
- PayPal: One of the first companies to handle online money transfers, PayPal has been in the game since 2008. Originally a web-based app, it now offers a mobile option with a simple interface that’s available on Android or iOS. The service is free if you connect the app directly to your bank account, or for a 2.9% fee you can use your credit card to handle transactions. Debit card transactions are also subject to a small fee. Transfers can take up to three days to process, or you can pay a 1% transaction fee for an instant transfer. PayPal has some of the better security features in this field, largely because it handles a lot of corporate business, and it also has one of the higher transaction limits ($10,000/transaction). Learn more here.
- Venmo: Although individuals can use PayPal, the company has largely marketed itself to businesses. It’s sister app, Venmo, has been successfully marketed toward individual users, becoming the darling of Millennials. One unique feature is the Venmo Feed. Similar to a Facebook or Twitter feed, it allows users to share purchases or transfers, add comments or emojis, and otherwise engage with their contacts’ shared purchases. (If this idea doesn’t appeal, don’t worry—the feed is turned off by default and users must choose to share purchases to the feed.) Transfers are free for debit and bank account transfers, with a 3% charge for credit cards and a 1.5% charge for instant transfers. Transfers can take up to 2 days. It’s available on Android and iOS. Learn more here.
- WorldRemit: The big draw to WorldRemit is its ability to handle transfers to over 150 countries. You can also send money in a number of ways, including as a bank deposit, cash pickup, mobile credit, or airtime top-up for pre-paid mobile plans. Unlike most apps in this category, many transfers through WorldRemit are instant (although depending on the country, they may take up to 7 days to complete). One downside is that fees for this app aren’t fixed, but instead depend on the amount of money being transferred and the destination. They may be subject to tariffs as well. Still, the app’s fees are on average 48% cheaper than sending money through banks and 25% cheaper than similar services such as Western Union. You can find WorldRemit on Android or iOS. Learn more here.
- Cash App: Formerly known as Square Cash, Cash App is owned by Square, the same company that made its name providing payment processing platforms to small businesses. Their innovative P2P offering lets users send and receive funds instantly when users connect the app to their debit card. Currently, Cash App only works with debit cards, doesn’t handle in-store payments, and limits users to sending $250 per day or receiving $1,000 per day. These limits can be increased to a $7,500 per week sending limit and unlimited receiving limit by verifying your identity. But on the plus, side transfers are free with a personal account (business accounts pay a 3% fee). Users can also invest in stocks and cryptocurrency directly through the app. You can find Cash App on Android or iOS. Learn more here.
- Google Pay: Google brings some interesting features to the P2P market by integrating their money transfer app into other Google services like Gmail. This integration makes it even more convenient to transfer funds to anyone, with or without the actual app. If you already have a Google account, then there’s little to no signup involved and transfers are free. You can use the app to make in-store purchases, web purchases, or pay individual people, and it even allows you to manage gift cards and loyalty programs. Google Pay is actually pretty secure as well, with the app substituting virtual card numbers for your actual card numbers, utilizing encryption, and integrating passkeys to keep information secure. Transfer limits are also impressive, with a $10,000 limit for single transfers and a $10,000 per 7 days limit. Debit card and bank transfers are free while credit cards are subject to a 2.9% fee. Transfers to debit cards are instant, while transfers to banks may take up to 5 days. Although it’s a Google app, Google Pay is available on iOS as well as on Android. Learn more here.
- Apple Pay: Part of Apple’s digital wallet, Apple Pay uses a linked credit or debit card to send money through Apple Messages. Money that is received through the app can be stored in your digital wallet or transferred to a Visa debit card or bank account. Transfers are free and can take up to 3 days; instant transfers carry a low 1% fee. One really nice feature in Apple Pay is that your money in the app is federally insured up to $250,000, just like at a traditional bank, giving users added confidence in the app. Users can send up to $10,000 per transaction or up to $20,000 per week with a connected debit card or bank account. Like with Google Pay, the app can be used for P2P transactions, in-store, or online purchases. It can also be linked with users’ Apple Card for additional convenience. As you’d expect, Apple Pay is only available on iOS. Learn more here.
The Future Of Digital Payments
While most Americans still rely more on cash, credit cards, and debit cards to make purchases, an increasing number of consumers are turning to money transfer apps for their convenience. This number is likely to grow, too, as more banks begin offering similar services through their mobile banking apps. As competition grows among money transfer apps, consumers can look forward to enhanced security and features as providers compete for their business.
But it’s not just businesses that are going cashless these days. Many nonprofits are looking for ways to accept donations electronically. Electronic donations offer nonprofits many benefits, such as more accurate ways to track money, options for donors to automate giving, and better ways to keep donors engaged.
If you know a nonprofit that’s looking for an online donation system, have them check out TS Donate, the TracSoft donation app. With lowers costs, a highly-customizable app, and the features nonprofits need, TS Donate can make electronic giving easier. Find out more at TSdonate.com or contact us to find out what we can do for you.