Formed by Square Inc., Square Cash was launched in October of 2013 by Twitter co-founder Jack Dorsey and Square Inc. co-founder Jim McKelvey.
How Square Cash Works
This application allows person-to-person money transfer over e-mail via their IPhone or Android phone. Users send money by drafting an e-mail, including the dollar amount in the subject of the e-mail, and CC’ing Square Cash, initiating a transfer directly to the recipient’s debit card. Although there are other similar applications, this one is free. It doesn’t require knowing the recipients bank account number and no need to set up a username and password. It relies on a debit card number.
New York Times writer Ron Lieber explains, “Wire transfers have been around for a while, and people often forget that PayPal started as a way for people to email money to one another. Square is not the only company offering person-to-person payments.
PayPal still does, and Google and Amazon have relatively new offerings as well. Several big banks have formed their own shared network to allow account holders to zap money around and Capital One has joined the consortium. Then there are newer companies like Dwolla, Venmo (now owned by PayPal), Ribbon and others conducting similar experiments.
But Square Cash and its send-from-any-email-address trick is so easy that it feels somehow illicit. First-time senders will get an email prompting them to go to the company’s website and type in their Visa or Mastercard debit card number and expiration date. First-time recipients will get a similar note. Once that is set, Square pulls money from one debit card and credits it to the other. It promises that the money will land in one or two business days, but it sometimes happens faster.”
Walter S. Mossberg of the Wall Street Journal gave Square Cash a try.
“I tested Square Cash, sending and receiving money in amounts ranging from $10 to over $1,000, with eight people, and it worked rapidly and flawlessly.
I can recommend it for anyone who needs to pay a small debt, give a cash gift, split a bill, or send cash quickly and easily. I sent several $5, $10 and $25 amounts, and asked for and received, all or part of the money back, in order to test receiving money. I also used Square Cash to settle a real bill, with a friend, to pay my half of a shared $2,223.76 fee she had covered.
It worked fine in every case.”
Security Issues? They have it covered.
When discussing security issues with Square Cash, Mossberg stated,
“The company has a strong track record in its merchant business, so it isn’t brand new to the money-transfer business. And Square says it has strong security measures and close human and machine monitoring for possible fraud. If fraud is suspected, the company says it can and will reverse the fund transfer. Still, digital services do get hacked, and email can be manipulated by thieves.
The service notifies you via email or text that it appears you have sent money, which gives you a chance to cancel a transaction that didn’t come from you or was a mistake. So, if you don’t trust Square to defeat such things, you shouldn’t use Square Cash.”
Forbes writer Joshua Steimle had this to say,
“What Square has is a drop-dead easy process for getting started. It’s as easy as they make it out to be. I had to enter my debit card information, connect to my Facebook account to verify who I was (you can also verify by submitting your SSN and some other basic info), and enter a number texted to my phone. Perhaps that sounds like it’s getting complicated, but compared to anything else I’ve signed up for involving financial transactions it was much, much easier.
The entire process took me something around 2-3 minutes, and the next time I send money will be a matter of a few seconds. After sending the email, my contractor received an email asking her for her debit card info. She put that in, and now she’s waiting for the money to show up in her bank account.
Square Cash says it takes 1-2 days, but according to Twitter user Marshall Haas, upon participating in a transaction he received the money in his account in just 3 hours. (Update: My contractor received the money I sent her in her bank account well within the 2 business days promised.”
How Square Cash Compares with other Online Money Transfer Services
Yahoo News recently published a comparison report regarding companies providing online cash transfers. Their report included the following information:
There are two ways to send money. After attaching a debit card to your personal Square account, either you can manually draft an email message to the recipient with the dollar amount in the subject line (at least $1) and copy firstname.lastname@example.org, or you can use the Square Cash mobile app to create the email attachment for you. Either way, the transfer goes through your email account and the email account of your recipient.
• It’s completely free.
•After attaching a debit card, everything else is as easy as emailing the money.
•There’s no support for credit card accounts.
•The weekly limit is $250 unless you link a mobile phone number and Facebook account, or verify your full name, part of your Social Security number and date of birth — then it’s raised to $2,500.
•Although it is available throughout the U.S., the application is just now becoming more internationally recognized and utilized.
PayPal lets you send money from a checking account, debit card or credit card account. All transfers and receipts are handled through the service’s webpage or mobile app. You have to link an email account to register a new PayPal account. Though credit card and debit cards are accepted funding methods for online transfers, 2.9 percent of the amount, plus a $.30 fee, is tacked on to each transaction, as opposed to no-fee transaction with linked bank accounts. The sender decides which party pays transaction fees. International transfers are also an option with PayPal, but charges range from .5 to 2 percent for bank account transfers and 3.4 to 3.9 percent for credit or debit cards.
•Various funding methods
•Widely used — most people already have accounts
•High limit of $10,000 per transaction
•Debit and credit card transfers are not free.
•Transfers are deposited in the recipient’s PayPal account, which have to then be withdrawn.
Google’s Gmail also has many, so the good news with Google Pay is that many people already have an account: They just have to link funds through the Google Pay service to get started with transfers. Though Google Pay is best known for its NFC tap-to-pay technology on Nexus and other high-end Android devices, sending money from a desktop computer with Google is almost as simple.
In the attachment options of the compose page in Gmail, click the money sign and select which linked funds you’d like to send money from. If the recipient is already a Gmail and Google Pay user, then the money will be deposited into his or her Google Pay account once the transfer is accepted on the other end of the email. If not, the recipient will have to sign up for a Google Pay account to receive your payment. Google Pay also gives users the option to send money through the service’s website or mobile apps for Android and iOS.
The service on desktop or mobile taps into your Gmail contacts so you can just type someone’s name in to pull up his or her email address, a convenient part of operating within the Google garden. Google Pay applies fees for debit and credit card transactions, with 2.9 percent charged to the sender.
•Sending money as a Gmail attachment is very simple.
•Anyone with a Gmail account just needs to link a bank account, debit card or credit card to get started.
•High limit of $10,000 per transaction and $50,000 per five-day period.
•If you don’t already have a Gmail account, you’ll have to sign up for one.
•Debit and credit card transactions are not free.
•Money is deposited in a Google Pay account, which then has to be withdrawn to your bank account.
•It can send money only in the U.S
For those looking to send and receive money with a social networking twist, Venmo might be the answer. Users can make bank account or debit card transfers to other Venmo friends for free (credit card transfers cost the sender a 3 percent fee). Transactions between friends can then be posted to the app’s real-time Facebook-like newsfeed with personalized messages and comments if the user so chooses. If you haven’t yet signed up for Venmo, you can be notified by text or email that someone is sending you money or requesting funds from you. You will have to install the app or sign up on the Venmo website to complete the transaction.
•Social network feed of friends
•No-fee transactions for bank accounts and “most debit cards”
•Available only in the U.S.
•Transaction fee of 3 percent for credit card transfers
•“Most users” have $3,000 transfer limit per week.
So, overall, Square Cash is a promising company, with an amazing product that works so really well. We’re hoping that it becomes mainstream one day.