Wednesday, May 22, 2024
Apps

What is Cash App and how does it work?


Banking is changing all over the world, and one of the players in this current wave of finance tech is Cash App. You might’ve heard of it, but what do you actually get out of it? We’ll explain.


What’s Cash App?

Cash App started out life in 2013 as Square Cash, the customer companion app to the business-focused Square point-of-sales ecosystem. Since then, Square, co-founded by Jim McKelvey and prolific Silicon Valley character Jack Dorsey, has become Block, Inc. In addition to Square and Cash App, the firm also owns hi-fi music streaming service Tidal and runs research on blockchain technologies and cryptocurrency advancement. Since its inception, it’s been competing in the US against Venmo (which got acquired by PayPal the same year) in offering digital peer-to-peer payments. Over time, though, it and other fintech apps have added new features such as fractional stock trading and even tax preparation.

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What can you do with Cash App?

The Cash app offers several services and features in the US:

  • Peer-to-peer mobile payments
  • Loyalty rewards for participating businesses using Square
  • Checking and savings accounts
  • Stock trading
  • Bitcoin trading
  • Free federal and state tax preparation

Cash App is also available in the UK, but only for peer-to-peer payments. Users from either country can send money to recipients in the other country without a fee.

We’ll try to paint bigger pictures for each of these services and nail down some details you might have questions about.

How to sign up for and try Cash App

If you want a Cash App account in the US, you’ll need to download the free app for Android or iPhone from either the Play Store or the App Store and follow the instructions as they’re laid out:

  1. Input a phone number or email address. Confirm the one-time passcode that is sent.
  2. You will be encouraged to link a debit card to your account so that you can move money in and out of Cash App.
  3. Enter your name, then come up with a $Cashtag – a screenname that lets others find and pay you.
  4. Enter your ZIP code.
  5. You may opt to receive Cash App’s Cash Card if you wish.
  6. If you’ve opted to share your contacts with Cash App, it will recommend some for referrals. For each person that signs up with your link, they will receive $5 and you will receive $15 as a new account, $5 after some time.

After you do that, you may also log into your new account through the Cash App website and perform some of the functions available through the app.

How to send or request money with Cash App

If you have money to send to someone else on Cash App, here’s how you do it:

  1. Open Cash App. If you’re not already on the main screen, tap the middle tab of the bottom row featuring the app’s dollar sign icon.
  2. Enter the amount you wish to send or request. The minimum is $1.
    • There is a toggle for the amount to be in your local currency (USD or GBP) or in Bitcoin. From this screen, you must own Bitcoin before sending any to others.
  3. Tap “Request” or “Pay”
  4. If you’ve given Cash App access to your contacts, you may search your recipient or payer by name, phone number, or $Cashtag. Recipients and payers must have a $Cashtag.
  5. You may also add a note about the payment in the field labeled “For.”

Once a request is complete, it will send a notification to the intended payer prompting them to pay you through the app. On the other hand, after tapping “Pay,” you will have the option to send the value of your payment as currency, a gift card, stock, or Bitcoin. There is no fee for any payment type.

The app may display a warning prompt if you’re exchanging money with someone new who is not in your contacts. You have the option to review their profile, confirm to proceed, or cancel the transaction. You will be asked to review and confirm the transaction itself once you’ve put in all the details.

How to transfer money to or from a Cash App account

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If you don’t already have funds in your account, you won’t be able to make payments with your Cash App account until you have linked up a bank account or debit card.

Cash App prefers you link a debit card to facilitate instant fund transfers, but you can also choose to link up your bank account instead or as an additional option.

  • From Cash App’s home screen, tap on the profile icon on the top-right corner.
  • Tap on Linked Banks > Link Debit Card > No Card?

You will go through a setup flow provided by Stripe, a digital interconnect platform for financial institutions. It will involve looking up your bank, logging into your online account, and clearing any requested security measures.

After linking a card or account to Cash App:

  • Access the Money tab by select the leftmost of the bottom row of icons.
  • In the box that says “Cash Balance,” tap either “Add Cash” or “Cash Out”
  • Enter the amount you wish to put into or take out of your Cash App account.
    • For cashing out, you may have the option for an Instant transfer. A fee between 0.5% and 1.75% will apply with a minimum of 25¢.
    • Otherwise, a free standard deposit will take between one and three business days.

You can set up recurring deposits into your Cash App account.

Can I deposit and withdraw real cash from a Cash App account?

Unless you use the Cash App Cash Card, you aren’t able to withdraw cash directly from your account. You may, however, deposit cash directly into your Cash App account through a feature called Paper Money. The service is facilitated via a third party called VanillaDirect.

Paper Money deposits are accepted at locations of some big-name retail chains including 7-Eleven, Dollar General, Family Dollar, Rite Aid, Sheetz, Speedway, Walgreens, and Walmart.

To perform a Paper Money deposit:

  • From the Money tab in the app, tap on Paper Money.
    • You will be prompted to grant Cash App access to your location information, but you can still deposit with Paper Money if you deny the permission.
  • You’ll then be taken to a map with participating locations highlighted by pin markers. You also have the option to search for nearby options based on address.
  • Enter a location and tell the cashier that you’d like to make a Cash App deposit.
  • Tap “Show Barcode” and have the cashier scan it. The barcode is valid for up to six minutes after being generated.

You may deposit between $5 and $500 per transaction with a 7-day cap of $1,000 and a 30-day cap of $4,000. Each transaction costs $1.

What’s the deal with the Cash App Cash Card?

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The Cash App Cash Card allows you to make purchases wherever Visa debit cards are accepted whether it’s online or at brick-and-mortar locations. A physical card can take up to ten business days to be delivered, but you can also register your card credentials with Apple Pay, Google Wallet, or Samsung Pay and begin using your Cash Card immediately on mobile payment terminals and online. You must be 18 or older (13 or older with parental consent) to receive a Cash Card. The card is issued by Sutton Bank of Ohio.

Cash Card users are limited to making $7,000 worth of transactions in one day, $10,000 in a calendar week, and $15,000 in a calendar month. Any attempted transaction, whether approved or declined, goes toward these usage limits.

ATM transactions

All ATM transactions whether it’s deposits or withdrawals are tagged with a $2.50 fee from Cash App. That is in addition to any fee charged by an out-of-network ATM operator. If you have set up a direct deposit of $300 or more per month, you can make fee-free transactions at Allpoint-branded ATMs and select others. You can find the nearest eligible ATM by:

  • Opening Cash App and selecting the Cash Card tab (second from the left)
  • Select “Find an ATM”
    • You’ll be asked for permission to use your location data, but you don’t need to grant it.
  • You can then use the map and search functions to locate an ATM near you.

You may also withdraw money for free by requesting cash back wherever they’re allowed. These transactions do count towards your ATM withdrawal limit of $1,000 per week. This limit resets every Saturday at 7pm Central Time.

How to trade stocks or Bitcoin with Cash App

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Investing in stocks and Bitcoin is amazingly easy with Cash App. In fact, Cash App itself provides the brokerage service. It charges fees when placing buy and sell orders. You must be 18 or older to trade securities.

  1. Open Cash App and open the Cash tab (leftmost button)
  2. Select either “Buy Bitcoin” or “Invest in stocks”
    • For stocks, you can either select a spotlight stock or search by company name or ticker symbol.
    • For Bitcoin, you just need to press “Buy Bitcoin”
  3. You’ll then place an order. You may choose between different order types by selecting “Change Order Type.”
    • The default order type is a one-time order. You can choose between preset amounts or enter your own above $1.
    • Auto Invest lets you make automatic recurring purchases on a daily, weekly, or bi-weekly basis.
    • Custom Purchase Order lets you set a price target that will automatically trigger a buy order. The target can be set to expire within a day, a week, 30 days or 90 days.
  4. If it’s your first time placing an order, you’ll be asked to confirm your address and set up a Cash PIN to secure access to trading actions.
  5. You’ll then be asked to confirm your order before it is placed.

If you perform day trades (buying and selling a stock on the same day), you are limited to three in a rolling five trading day period. You can also earn Bitcoin by making a particiating purchase with a Cash Card. Open the Cash Card tab in the app and look for the “Boost” section to see what purchases will get you some free cryptocurrency.

How to file taxes with Cash App Taxes

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Cash App offers free federal and state tax preparation in the United States.

  1. You can access this service by going to cash.app/taxes or opening Cash App
  2. Then, select the Cash tab (leftmost icon on the bottom).
  3. Choose “File taxes for free.”
  4. You’ll need to enter your password each time you enter into the process.

Cash App acquired its tax preparation business from Credit Karma in 2021. The company does not participate in the IRS’s FreeFile program which requires participating services to place limits on their applicant pool – there’s no difference if you receive a W-2, 1099, or both and no cap on how much you’ve earned in a year to file with Cash App for free. It is able to offer free preparation by taking some of your filing information and requesting quotes for personal loans from a number of servicers, earning extra revenue for successful referrals. If you’re concerned about your data being circulated to different third parties, you’ll want to consult Cash App Taxes privacy policy and terms of service.



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