The Hidden Drawbacks of Cash Apps: A Comprehensive Guide to Security, Fees, and Alternatives[ 2023 ]

Cash App, also known as Square Cash, is a mobile payment service that allows users to transfer money to one another using a mobile phone app. It has become popular in recent years for its convenience and ease of use. But, as with any financial tool, it’s important to consider the drawbacks before deciding to use it.

In this article, we will explore the Drawbacks of Cash Apps, like security concerns, fees, and limitations, and discuss alternative options and the company’s financial stability.

The question is whether there are any dangers in dealing with cash apps. 

Here are such disadvantages: –

  1. Even the FDIC cannot ensure the deposits in the Cash app account. The cash app presents a new danger, and the client would lose all his money if there are losses in the cash app or if they close down.
  2. Cash app end-of-month balances do not earn interest. Hence, they would not pay you any good too. 
  3. Cash app users receive debit cards. The problem is that using debit cards at an ATM attracts $2.00 and is termed a transaction fee. 
  4. There are transaction limits in the cash App too. An overall limit of $ 1000 and a maximum of $310 per transaction is imposed for cash App customers.
  5. The reports from the square cash app are not in digital formats like Excel Spreadsheets or Digital invoices. 
  6. Cash flow information is critical for managing the same. Payment tracking is also vital. None of these features are available in the cash app.
  7. One cannot conduct Data analysis properly with the reports picked up from the cash app. For example, if you wish to bifurcate quarterly, semi-annual, and yearly sales, you must put in a lot of manual effort.
  8. Foreign currency transactions are not possible with the cash app. Therefore receiving payments in foreign currency is impossible, and you may lose exchange value.
  9. Under the cash app, one cannot maintain separate or exclusive accounts for sales, inventory, etc. 
  10. Credit cards can be used but with a 3% fee only.

Drawbacks of Cash App:

Security Concerns:

Cash App has been a target of several security breaches, compromising some users’ personal information and financial data. Additionally, the app has been known to freeze accounts for suspicious activity, leaving users without access to their funds. To protect oneself, it is important to enable two-factor authentication, use a unique and secure password, and check one’s account for unauthorized transactions.

Fees:

Cash App charges a 3% fee for transferring money to a bank account or using a credit card. These fees can add up quickly, especially for frequent users. Considering these fees is important before using the app for regular money transfers.

Limitations:

Cash App limits how much one can send and receive $250 within seven days and up to $1,000 within 30 days. Additionally, the service is only available in the United States, so there are better options for international money transfers. Consider these limitations when deciding if Cash App is the right choice for one’s needs.

Alternative Payment Options:

While Cash App may be a convenient option for some, it’s important to explore alternative payment options to find the one that best suits one’s needs. One alternative is Venmo, which is like Cash App features and fees. Venmo has a larger user base and offers more security features than Cash App. Another alternative is PayPal, which is widely accepted and has a long history of handling online transactions. PayPal has been operating for over 20 years and has over 300 million active users.

Comparison of Cash App with Alternative Payment Options:

  1. Security Measures:

  • Cash App uses 256-bit SSL encryption and requires a unique password and two-factor authentication. Additionally, it offers account freeze and fraud detection features for added security.

  • Venmo uses 128-bit SSL encryption and requires a unique password and two-factor authentication. Additionally, it offers account freeze and fraud detection features for added security. It is also PCI-DSS compliant.

  • PayPal uses 128-bit SSL encryption and requires a unique password and two-factor authentication. Additionally, PayPal offers buyer and seller protection, account freeze, and fraud detection features and is PCI-DSS compliant.

  1. Customer Support:

  • Cash App offers customer support through in-app chat, email, and phone. The hours of operation are Monday to Friday, 6 am to 6 pm PT, and Saturday and Sunday, 8 am to 5 pm PT. Response times vary depending on the nature of the inquiry.

  • Venmo offers customer support through in-app chat, email, and phone. The hours of operation are Monday to Friday, 6 am to 6 pm ET, and Saturday and Sunday, 8 am to 5 pm ET. Response times vary depending on the nature of the inquiry.

  • PayPal offers customer support through in-app chat, email, and phone. The hours of operation are 24/7, and response times vary depending on the nature of the inquiry.

  1. Fees and Limitations:

  • Cash App charges a 3% fee for transferring money to a bank account or using a credit card. Additionally, there is a $2.50 fee for instant deposits to a debit card and a $5 fee for expedited card replacement. Cash App limits how much one can send and receive weekly to $250.

  • Venmo charges a 3% fee for transferring money to a bank account or using a credit card. Additionally, there is a $0.25 fee for instant deposits to a debit card. Venmo limits how much money one can send and receive weekly to $4,999.99.

  • PayPal charges a 2.9% + $0.30 fee for transferring money to a bank account or using a credit card. Additionally, there is a $1.50 fee for instant deposits to a debit card. PayPal limits how much money one can send and receive daily to $10,000.

  1. International Money Transfer Options:

  • Cash App is only available in the United States and does not currently support international money transfers.

  • Venmo supports international money transfers, but only to select countries. Fees for international transfers vary, and there may be more limitations or restrictions. Venmo’s exchange rate determines currency conversion rates at the time of the transaction.

  • PayPal supports international money transfers to over 200 countries. International transfer fees vary, and more limitations or restrictions may exist. PayPal’s exchange rate determines currency conversion rates at the time of the transaction.

  1. Real-Life Scenarios:

  • Cash App is useful for splitting a bill with friends, paying rent to a landlord, or sending money to a family member in the United States.

  • Venmo is useful for splitting a bill with friends, paying rent to a landlord, or sending money to a family member in select countries.

  • PayPal is useful for online shopping, sending money to family and friends overseas, or for businesses to accept payments from customers.

  1. Customer Reviews:

  • Cash App has a rating of 4.2 stars on the App Store and 4.5 stars.

Financial Stability of the company:

Cash App is owned by Square Inc, a publicly traded company with a market capitalization of over $100 billion. The company has been in operation for over 10 years and has a strong financial track record, providing stability for its users.

Conclusion:

Cash App is a popular and convenient mobile payment service, but it’s important to consider the drawbacks before deciding to use it. Security concerns, fees, and limitations can impact one’s experience with the app. Additionally, it’s worth exploring alternative options to find the one that best suits one’s needs, such as Venmo and PayPal.

Keep one’s personal information and financial data secure by enabling two-factor authentication, using a unique and secure password, and checking one’s account for unauthorized transactions. It is also important to consider the financial stability of the company behind the app, in this case, Square Inc.

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