Square Cash Review
I thought, for a long time, that PayPal was invincible, a behemoth that couldn’t be taken down by anyone, and certainly not by an underdog like Square. I’m a lot less sure of that these days, because Square is rolling out feature after feature that’s taking a shot at PayPal and its supremacy in the online payments space. One of those features is Square Cash. Like PayPal (and Venmo), it’s a digital wallet for consumers. They can send money to their friends and family at no cost, load money from a card, or move money from their wallet to their card or into their bank accounts.
Square Cash isn’t new (it’s been around since 2013, in fact) but I think it’s finally reached the point where’s not just a cool concept, but an actual, viable contender in the digital wallet space. Because that’s the problem with a lot of “alternatives” to the industry giants. The idea might be there, but it fails in actual execution. Or it can’t get enough people to adopt it for the product to become viable.
Cash definitely isn’t as full featured as PayPal, or even its subsidiary Venmo. Just this year, the app has made huge strides in bulking up its feature set, so I’m confident we’ll see even more improvement soon. And even though we’re still a long way off before we start to see websites that offer Square Cash wallets as a payment option, Square has a work-around in the form of a virtual card.
All of this is well and good for consumers, but what about businesses? What does a digital wallet for consumers have to do with merchant accounts and payments? Well, like PayPal, Square Cash has an option that allows businesses to get paid as well.
To be fair, this is very much “Square Lite.” You are not going to get anywhere even remotely close to the number of features that a traditional Square merchant setup offers. So if you need all the bells and whistles, Cash isn’t for you. But it’s a really great solution if you run a mobile service-based business, or only sell a couple of retail goods at pop-up booths from time to time. You can even use it for fundraising, both in person and online.
But the question is, should you use Square Cash?
Let’s take a look at the Square Cash service — how it works and how effective a tool it is for businesses. Keep in mind this is not a full-fledged payments option and it’s not interoperable with Square. Rather, it’s a lightweight, mobile alternative or supplement.
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Square Cash at a Glance
Imagine: You’re at dinner with a group of your friends. The waiter comes around with the bill, and oops, the restaurant won’t split the check! Half your friends don’t have cash. So what do you do now? Someone whips out their phone and sends a request to all their friends via Square Cash — and then they cover the bill.
That’s the basic concept, anyway. It’s pretty easy — and so is the signup process. You can download the mobile app from iTunes or Google Play, or sign up on the Cash.me website. You’ll enter your email or mobile number, and Square will send you a confirmation code. You will never set an actual password on your account. You’ll always log in with the passcode.
Once you’ve signed in for the first time, Square will ask what you want to use the Cash service for (sending money to friends and family, or business). Then, it’ll prompt you to link a bank account. You can also link debit and credit cards — though if you fund your wallet from a credit card, you’ll pay a 3% fee to Square.
Once that’s done, your Cash account is set up and you’re ready to use it. You can tweak settings from within the app or online, including choosing whether the funds will stay in your wallet or go directly to your bank account.
Deposit times are on par with Square’s core services: next-day deposits by default, with an option for to initiate an Instant Deposit for 1% of the transfer amount. Actual deposit times will still depend at least in part on your bank, as well.
The Fine Print
If you know anything about Square, this is probably where you’re wondering if that’s really it. Are there no catches? No, there aren’t — at least not beyond what you expect from any sort of digital wallet.
Square Cash won’t ask you for a lot of information about yourself until you hit a certain threshold for transactions. And then, the company is going to reach out and ask to verify your identity. It’s a pretty simple process, fortunately — at least if you’re just a consumer doing peer-to-peer (P2P) transfers to your friends and family. For a business, Square may collect more information in order to verify your identity, all to comply with IRS guidelines.
In addition, verifying your identity is a bit more complicated with the virtual card and there are strict transaction limits imposed — we’ll get into that.
Here’s what the Square Cash user agreement says about identity verification and limits:
“Additional identification information will be required to send more than two hundred and fifty dollars ($250) in any one transaction or in multiple transactions over any rolling seven (7) day period or to receive more than one thousand dollars ($1,000) in any trailing thirty (30) day period. Senders may not send more than two thousand five hundred dollars ($2,500) in any one transaction or in multiple transactions over any rolling seven (7) day period. We may adjust these limits at any time in our reasonable discretion.”
The user agreement doesn’t spell out any specifics for business accounts, unfortunately. However, it does say that in creating a Cash for Business account, you are also agreeing to Square’s terms for payments and general user accounts as well.
Square stresses this pretty heavily and I think it’s a good call: Don’t use your Cash business account for personal use, and don’t use your personal account for business. Square is perfectly OK with you having multiple accounts, though each one has to have a unique email or phone number. But you can link the same card or bank number to multiple Cash accounts.
While your account is linked to a mobile number or email, you can also identify yourself using what square calls a “cash tag” — It’s not unlike the hashtag, except that it’s preceded with a $ instead of a #.
Cashtags are used with the Cash.Me website and they’re unique to each user. You can set up your own page and allow people to send you funds that way. Wikipedia’s cashtag, for example, is $Wikipedia.
Cashtags aren’t necessary for P2P users. You can use the app, or the website, to send money to someone via their name, their phone number, or email. It’s also worth noting that Square vets cash tags, and certain phrases are totally banned (it doesn’t specify which ones, but you can guess, they’re probably curse words and obscenities). You only get limited edits to your cash tag. However, you can revert back to a previous cash tag without that penalty applying. Also, no one can claim your previous cash tags either.
Using the Square Cash Virtual Card
One of the more interesting aspects of Square Cash is the virtual card. I think it’s what makes Cash an actual competitive alternative to options such as PayPal. Having a digital wallet is well and good, but there’s no point if you can’t spend that money anywhere — and only Square Cash merchants are accepting Cash as a payment option right now.
The virtual card is exactly what it sounds like: It’s a digital “debit” card with a 16-digit number just like any other card, issued by Sutton Bank of Ohio and backed by Visa. It works pretty much like a prepaid debit card: You can spend your cash balance online with any service that accepts cards. No need to worry about a site specifically supporting Cash.me.
Not only that, but Square recently announced that you can add your card to your Apple Pay account, so you can spend your money anywhere that supports contactless payments. Given how much Square has added to its Cash program lately, I suspect it won’t be too long before we see even more support for the virtual card.
One quick caveat: You will have spending limits on your virtual card, which are spelled out in the user agreement (and below):
“Subject to the paragraph labelled ‘Limited Use Virtual Card,’ the maximum amount that can be spent using your Virtual Card is $1,000.00 per day. The maximum amount that can be spent using the Virtual Card in a seven-day period is two thousand five hundred dollars ($2,500). The maximum amount that can be spent using the Virtual Card in a thirty (30) day period is ten thousand dollars ($10,000).”
In addition, there’s a verification process required that will restrict what you are able to do with the virtual card as well:
“Specifically, with a Virtual Card with limited use you will not be able to: (a) add or load funds into your Virtual Account in excess of $1,000 in a day, (b) add funds into your Virtual Account in excess of $1,000 in a rolling seven (7) day period or (c) hold more than $1,000 at any time in your Virtual Account until we have successfully verified your identity and approved you in our sole discretion to have full use of your Virtual Card.”
So now that you have an idea of how the app works in general, let’s take a look at the specifics for businesses:
How to Use Square Cash for Business
With Square Cash, you can accept payments online or via the app. It’s actually pretty functional — when you send or receive money it’s possible to leave a note so you can keep track of what each transaction is for. And as with using the Square Register app, you’ll pay 2.75% per transaction. That’s actually slightly up from the rate Square originally offered businesses when Square Cash for Business was still “Cash Pro” — 1.5%. But it makes sense for Square to standardize its rates across the board, especially since it now accept credit transactions, not just debit.
But this is still Square Lite: You don’t get a store with inventory, just an option to request money or have people send it to you. That works especially well for mobile services, but if you only sell one or two items in person, it could be feasible. You’d just need a tablet set up with the website.
At the same time, Square Register is the same price and has a boatload of features. So you might consider whether the full-featured version is worth the investment.
With the website, all your customers need to do is enter their payment information. The URL is based on your cashtag, so they don’t need to know your phone number, email, or legal name to pay you. They also don’t need to create their own Cash account to make a payment.
To send payments via the app, however, you’re going to need to be a Cash user. It’s painless to sign up — download the app, and link it to your mobile number or email, then add a card or bank account.
You can leave your funds inside the cash app or send them to your debit card/ bank account. Like Square, you get next-day deposit by default, or instant deposits for 1% of the deposit cost. That’s exactly how the full-fledged version of Square works, too.
Final Verdict: Should You Use Square Cash for Your Business?
Square Cash isn’t quite ready to unseat PayPal, or Venmo, as the top digital wallet option. It’s got a bit of growing to do before it’s really ready to get into the ring with the heavyweights — but it’s definitely getting close.
And even if it doesn’t take the top spot, it’s absolutely a viable option if you just want to move money and accept payments with ease. It’s tough to argue with the convenience Square Cash, especially since you don’t need to create an account to send money.
Now, there are a couple of pressing issues:
- Square has a history of shutting down accounts it suspects of fraud or those that are high-risk, and you’re still agreeing to Square’s general terms when you sign up, including a clause that says they can terminate your account if they decide you’re an unacceptable risk.
- You will encounter processing limits, so this probably isn’t the best idea for high-ticket transactions. (You might want to consider Square’s regular invoicing service for that.)
- There’s not a lot of complexity in the Cash setup to address the challenges of a retail environment, and you don’t have a detailed invoice option.
- Some Cash users complain about funds getting lost in transit or not arriving in their bank accounts as quickly as expected. However, Square seems to be helpful in clearing up those mishaps, and part of it will depend on your bank’s processing times as well. These complaints are typically users, not merchants, as well.
That said, Square Cash is a great option for mobile businesses and service providers — personal trainers, hair stylists, makeup artists, landscaping and lawn care companies, photographers — and even accountants, therapists, and tutors. If you fall into one of these categories and don’t want to bother with downloading the Register app and swiping cards, this could work really well.
And finally, there are two challenges businesses will face that have nothing to do with Square:
First, it’s entirely on you to ensure payments are made on time. It’ll become very important that you follow up with clients in a timely manner. You can’t afford to be lax in making sure your clients are responding to your requests for payments. This is the exact struggle that anyone who relies on invoices faces — cash is, after all, the lifeblood of a business.
Second, there’s the matter of educating customers. If most of your customers fall in the 18-to-35 age range, they’re likely to be tech savvy and they’ll get the concept of Cash fairly easily. However, there will still be some people who don’t get it. You may have to explain Square Cash to them and walk them through the process of making a payment. Others may simply not trust the Cash.me website or requests for funds. For those reasons, it might not be a bad idea to have a backup means of payment — like Square Register, for example.
However, if you’re prepared to deal with those challenges and you just want a lightweight payment option, Square Cash is absolutely a great choice. As usual, there’s no contract or obligation with Square, so if you’re curious, I encourage you to set up an account and give it a try yourself! Then, leave us a comment about your experiences!