While paying online has become easier and more accessible over the years, the COVID-19 pandemic took virtual spending to an entirely new level. Some industry experts estimate that consumer adaption of online bill paying moved forward as much as 10 years. As more and more people are embracing this type of spending, the payment options are growing.
With that in mind, which virtual payment option is right for you? Here are seven of the top apps (arranged in no particular order) available to most consumers right now.
PayPal has been around since 1998 and was originally known as Conformity. In March 2000, it was acquired by x.com, an online financial services company founded by Elon Musk, the current CEO of Tesla and SpaceX. eBay then purchased PayPal in 2002, making it the payment provider for eBay transactions.(1) eBay subsequently spun PayPal off in 2015 as a separate company. Users can transfer money to any U.S.-based bank account plus several foreign banks. In October of 2020, Paypal launched a new service allowing users to pay for transactions using crypto currencies like Bitcoin, Ethereum, Bitcoin Cash and Litecoin. Users also can buy and sell these cryptocurrencies on Paypal’s app.
FEES & TRANSACTION LIMITS (PAYPAL) : There is no fee to make a purchase or transfer money domestically using a bank account or your PayPal balance. When using a credit card, debit card, or PayPal credit there is a 2.9% transaction fee. Users can send up to $60,000 through PayPal, however, they may be limited to sending $10,000 per single transaction.(2)
Venmo is owned by PayPal but they are run as two separate companies: each with a distinct niche.
Venmo is designed specifically for sending money between friends and family. Venmo is unique in that there is a social aspect to the app. Users are encouraged to include messages and emojis in transactions that can be seen by other users in your network.
Venmo uses encryption protocols to protect the personal and financial information of the users with information stored on servers that are in secure locations. Additionally, you can set up a PIN code and multi-factor authentication for greater security.
While Venmo is primarily used on your mobile phone, the above security measures are put in place to allow users to receive and transfer money effortlessly and safely.
FEES & TRANSACTION LIMITS (VENMO) : There is no cost to send money using your bank account, and users can pay for business transactions using this app. There is a three percent processing fee for qualifying transactions with a $299.99 spending limit for unverified users and less than $4,999.99 a week for verified users.(2)
A lesser-known mobile app, Zelle, offers a simple interface. As a user, you can send same-day money transfers to anyone who has an account with a participating bank including: Chase, Bank of America, Citi, Wells Fargo, Ally, Capital One, Fifth Third Bank.
Zelle has an app available but it is not required to use the service because you are able to access it via your bank’s online portal. A drawback to Zelle is that you can only connect one account at a time using the app. Therefore, we suggest that you connect your primary savings or checking account when using this app.
FEES & TRANSACTION LIMITS (ZELLE) : The fees associated with this service are on the bank side of the transaction. Many banks charge between $0.50 and $0.75 for each transaction. It is also important to know that, if your bank has no relationship with Zelle, then you are limited to spending $500 per week.(3) If there is a relationship between your bank and Zelle, you may spend up to $1,000 in 24-hours, $2,500 in a week or $10,000 in a month.(4)
If you have an iPhone, you can easily send or receive funds through Apple Cash. To use this app, you can: 1) Open the messaging app. 2) Select or create a new contact, 3) Tap the Apple Pay Icon at the bottom of the screen or you can even ask Siri to send funds.
FEES & TRANSACTION LIMITS (Apple Cash) : There is no fee to send, receive or request money using Apple Cash with normal delivery. If you select “instant transfer”, however, there is a 1% fee subject to a $0.25 minimum and $10 maximum. Apple Cash allows you to send or receive between $1 to $10,000 in a seven-day period. (5)
Square, now known as CashApp, is the number one finance app in the Apple Store.(6)
Like PayPal, CashApp now allows users to buy and sell Bitcoin. Many see this as a positive development. Like PayPal, CashApp is now considered a rival to Coinbase, the leading crypto trading platform.
When you open an account with CashApp, you are given a screen name called a $Cashtag. You can easily find others using their phone number or email address. Using a linked bank account, Cash App allows you to send and request money using their platform.
FEES & TRANSACTION LIMITS (CASH APP) : There are no fees associated with opening, sending, receiving, inactivity, or on foreign transactions. However, there is a flat 3% transaction fee if you pay for a purchase using a credit card.(6) But wait, there is more: It takes one to three business days to transfer money to your bank account. Should you choose to receive your money instantly, you can expect a transaction fee. You can send up to $250 within a 7-day period and $1,000 within a 30-day period.(7)
Formerly known as Google Wallet, Google Pay integrates with the G Suite account you may already have. As with most Google products, Google Pay is designed to work well with other Google products and services. Since it integrates well with other Google products, it is easy and intuitive to use for those who are already familiar with other Google’s offerings. Opting into Google Pay rewards allows you to receive additional rewards to your credit card.
FEES & TRANSACTION LIMITS (GOOGLE PAY) : There are currently no fees to sign up to use Google Pay. Users are limited to sending up to $10,000 in a single transaction.(8)
The 1,000-pound gorilla of social media, Facebook, which is home to around 2.7 billion users (9) now offers users the ability to send money to anyone with an account. This is done by connecting your debit card through Facebook Messenger. Here, users can send money to anyone with an account - as long as the other party’s debit card has been connected. Once payment has been accepted, it will appear in your bank account within five business days.
FEES & TRANSACTION LIMITS (FACEBOOK PAY) : Facebook Pay has no fees and does not store money in an online account. There is no minimum amount that you can send or receive but the maximum amount is $9,999 per transfer.
Obviously, there are a lot of choices when it comes to virtual spending apps. More are surely on the way. While there are many options, not all apps are created equal and some may fit your financial preferences better than others.
Are mobile wallets safe? Apple Pay and Google Pay are safer from fraud than a credit card. These payment programs use tokenization to mask your credit card information from the merchant, which is useless to hackers. Also, the use of peer-to-peer payment apps keep you from having to share your banking information. While this can limit your exposure to fraud, be sure to pay special attention to the strength and complexity of your log-in information and periodically review your transactions. Just as fraud is possible on your bank account, it is also possible on these apps.
The bottom line is that, from online shopping to splitting the bill at dinner, payment apps provide convenience and security when it comes to spending your money. There are many options for consumers so it pays to do your homework and find an app that works best for you. With the right app, these tools can help streamline your payment methods for future transactions.
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