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How Does Cash App Work?

Cash app

Cash App by Square, Inc. is one of the safest ways to send and receive money in the US and UK. However, unlike other mobile payment platforms such as PayPal, Payoneer, World Remit, and Skrill. Cash App does not work internationally. The question remains, how does Cash App work? In this article, I will show you how the app operates for you to understand it better.

The app is an online platform that you can operate using a smartphone or computer. Mobile users can download the app from either the Google Play Store for Android users or the App Store for Apple smartphone users. Creating an account is also online, and once you have downloaded the app, you can easily create an account using your email account or phone number.

It is possible to create multiple accounts using different phone numbers or email addresses. A single email account or phone number can only work with one Cash App account, and that is why you need several phone numbers or email addresses for multiple accounts. Once you create a Cash App account, the company will take about 48 hours to verify it. Verification involves confirming your identity and the authenticity of your documents.

What do I require to open a Cash App account?

Since Cash App is a financial institution, the government treats it as a bank even though it works with Lincoln Savings Bank. Therefore, the things you require are similar to the ones you need when opening a bank account. You have to provide;

  • Your name
  • Email address
  • Text-enabled mobile phone number
  • Street address
  • Zip Code
  • Date of birth
  • Social security number, and a
  • A government-issued ID

You have to ensure that you enter all the details correctly to avoid rejection during the verification process. However, your user name can be anything you wish as it does not need to be your real name.

Does I need a bank account to use Cash App?

You can use the Cash App without a bank account. However, you can add a bank account to fund your account or even withdraw to the bank account when the need arises. For example, you can transfer money from Chime to Cash App and vice versa if you link a Chime Bank account to your Cash App account.

While you do not need a bank account to operate your account, Cash App as a payment service has the Lincoln Savings Bank that usually issues users with the account number and routing numbers for deposit purposes. Cash App users can also have debit cards to use at ATM points. For the debit cards, Sutton Bank issues them and not the Lincoln Savings Bank.

How does Cash App work?

It is interesting to see how Cash App operates. The primary purpose of the Cash App is to send and receive money. Once you create an account, you can send money for free to family members and friends. You also have the chance to receive money from others without any cost.

The first step into using a Cash App account is by downloading the Cash App app from the relevant sites or visiting the Cash App site on your computer. If you are signing up from the Cash App site, you navigate the account creation section and enter your telephone number or email address. Next, type the code sent to you, and then adds a bank or debit card in the next space (optional).

Next, enter your full name and then decide your $Cashtag, which others can use to send you money. Lastly, enter the Zip code (a postal code that the United States Postal Service uses for various regions).

When you open an account for the first time with Cash App, it will be restricted. Such a Cash App account has all the necessary features except that you cannot send money to another Cash App user, be it a friend, relative, or a seller.

As soon as you initiate funds transfer to another Cash App user, a prompt will appear asking you to upgrade your account to an “Unrestricted Account.” You will see from the screen which information to provide to get the unrestricted Cash App account.

You can decide to remain with the restricted account and be sure that you will not send funds to someone else. However, it will be to your disadvantage. Sending and receiving money with Cash App involves the following:

1) Sending money

When sending money using your phone, open the Cash App and enter the amount you wish to send, and then hit ‘pay.’ Next, enter the recipient’s email address or phone number. Alternatively, you can enter the $Cashtag of the recipient. Write why you are paying the money and tap ‘Pay.’ The recipient should receive the money immediately or within a few minutes.

You need to remember that you cannot cancel a Cash App transaction, and thus you have to be careful when inputting details. Ask the recipient if they have received the money and if it takes too long for funds to reflect in their accounts, then call customer care via 1- 800-969-1940 or visit their help center.

2) Receiving money

You can receive money in your account either from other Cash App users or from a bank account or debit card when you link them. To receive money from other Cash App users, you need to provide your Cashtag, phone number, or email address associated with your Cash App account.

If you are receiving money from a bank account, you have to add them to your Cash App account. Just tap the Banking tab on your app’s home screen, then select ‘Add a Bank’ and follow prompts. The same procedure applies when adding a card. Once you choose to add a bank, you need to select the ‘Add Card’ option and choose a credit or debit card.

Interestingly, you can transfer funds to the bank account or card that links to your account. Cash App can only accept one bank or card, and thus you cannot add several bank accounts or cards.

What are the benefits of a Cash App account?

The Cash App is one of the most useful apps you can have for your day-to-day transactions. Various reasons make Cash App an excellent digital payment platform. These include the following:

i) Basic services are free
Cash App does not charge monthly fees, inactivity fees, fees to receive or send money, or foreign transaction fees. It is such a fantastic app.

ii) Optional debit card
Once you open a Cash App account, you can request a debit card (Cash Card) to pay for items and services or withdraw money at ATM points. The debit card by Sutton Bank allows you to make free ATM withdrawals if you set up a direct deposit for your account.

Otherwise, Cash App charges you a $2 fee for ATM withdrawals. However, once you receive successful deposits amounting to $300 or more, Cash App reimburses costs for three withdrawals in ATMs per 31 days and up to $7 in fees per ATM withdrawal.

iii) Cash boosts to help you save money
If you get a Cash Card, you can choose specific boosts from the app. Boosts come in percentages, and you can get a, for example, 5% boost on certain electronics, thus saving a considerable amount of money. You can only get one boost at a time, and you can swap your boosts as well.

iv) You can invest
With a Cash App account, you can invest and earn money. Cash App allows you to trade in stocks and you can always use your linked bank account to top up your account if you do not have sufficient funds for the trading activity.

v) Referral bonuses
You can refer your friends to join Cash App and get a $5 bonus on every person that joins and sends $5 to others with the new account. All you need is to generate a referral link and share it with others who click to open their accounts.

To get the bonus, ensure that your friend links a debit card to the Cash App account and sends payment within 14 days of account opening. The friend also gets a $5 bonus when they enter the referral code of the person who invited them. 

What are the drawbacks of the Cash App?

Cash App has some disadvantages that you need to know. These include;

1. Lack of insurance for the funds
Money in Cash App has no insurance from FDIC. Even though the platform works with Sutton Bank and Lincoln Savings Bank, the money in your app has no insurance. In case the Cash App collapses, you may lose your money.

2. Spending limits
You can only spend $7,000 per day and per transaction. Again, the app only allows up to $10,000 per week. The highest amount of money you can spend per month is $25,000.

3. Fee when you use a credit card
If you use a credit card to send money, Cash App will charge you 3% on the amount you are sending. You can, however, avoid fees if you use your Cash App balance, bank account, or debit card to send money.

Bottom line

Cash App generally operates like other online payment platforms such as PayPal, Skill, and World Remit. You can use Cash App either on your smartphone or your computer. A phone number or email address can only create one Cash App account. You can link a card or a bank account to your Cash App account, but you cannot send money using unverified Cash App accounts. Despite having many advantages, Cash App has drawbacks too.


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