If you watch a group of millennials dining out together, you are not likely to see them reach for their wallets when the bill comes. That would require them to let go of their smartphones which would be like asking them to amputate their hands. But why would they if they can use their smartphones to pay the tab?
In the age of digital payments, a growing number of people, especially of the younger generations, have no need for cash, preferring instead to let their smartphones do the paying with a few taps of their fingers. Peer-to-peer (P2P) payment services make that happen and Square Cash and Venmo are at the forefront of driving the digital payments revolution.
Venmo vs. Square Cash: Similar Apps
Both the Square Cash and Venmo P2P payment apps allow users to split a dinner bill, pay back friends, or loan money to family members. Both apps allow you to request money from or send money to another person or business using the app. The apps are free and so is the service, requiring only that you be connected to the internet to use them.
However, if you choose to link your account to a credit card, you will be charged a 3 percent transaction fee for each use. The apps are available for IOS and Android device owners across all 50 U.S. states. Those are the similarities between the two. As with any leading competitors, there are several differences that separate them.
The Square Cash App
The Square Cash app was launched in 2015 by Square, Inc., a fast-growing player in the electronic payments space. Square was among the first payment companies to introduce a credit card reader that could be connected to a smartphone which allows merchants to take credit card payments. The company later introduced Square Stand, which is able to convert any Apple iPad into a point-of-sale system.
Square Cash is simple to use, allowing money to be transferred between any two parties. When setting up an account, users must link it to their debit card, which is how the money is transferred to and from other people. Users are allowed to send up to $250 per week. Any amount over that requires verification using your name, date of birth, and the last four digits of your Social Security number.
You can send more than $250 to a business if it has a designated checking account. You are allowed to receive up to $1,000 in a 30-day period after which you will need to verify your identity. If you are receiving money into a business checking account, there is no limit. Once you verify your identity, you can send up to $2,500 per week, and there is no limit on how much you can receive.
When using Square Cash, you can use a $Cashtag to send or receive funds, this is like a unique user name that protects your anonymity. The money that is transferred into your account remains there until you cash out. When you cash out, you can have your money transferred to your checking account at standard speed (one to three business days) for free, or you can opt for instant transfer (same day) if you are willing to pay a 1 percent fee on the amount being transferred.
The Venmo App
Venmo was started strictly as a P2P payments app. It is now owned by payments giant PayPal, but still operates as a standalone app. Venmo’s functionality is very similar to that of Square Cash with some minor differences. First, Venmo’s weekly sending and receiving limit is $299, above which requires verification — date of birth, zip code, and last four digits of your Social Security number. The maximum you can send in a week is $2,999.
Venmo also differs from Square Cash in the way your money is handled once it is received. Unlike Square Cash, which allows you to cash out and transfer money to your bank account or credit your debit account, Venmo holds your money in an account that can be used the next time you need to send money.
You can either allow your funds to accumulate in your Venmo account, or you can take a few extra steps to have it sent to your bank account. Transfers to your bank account can take up to two days. Venmo also allows you to use your credit card as the linked account, but it charges 3 percent for each transaction.
Venmo’s Social Element is the Differentiator
The biggest difference with Venmo is its basic premise. Venmo views itself as a social network, allowing users to view and comment on their friend’s transactions. If you verify your account with Facebook, your transactions are made in full view of the Venmo community. Your friends can see you pay and why. It has worked well for Venmo because it is a large source of new users. If the social element is too much for you, you simply don’t log in with your Facebook account.