Cash App and PayPal are among the most popular digital money transfer apps in the United States. Being one of the first online money transfer apps to be invented, PayPal has played a huge role in shaping digital payment into what it is today.
While Cash App is relatively new in the P2P online payment app industry, it still gives PayPal a run for its money. So, how do these two apps stack up against each other? Below is a head-to-head comparison between them.
We recommend Cash App because of how versatile it is in regard to the services it offers. The app has a stock investment feature that allows individuals to invest in stock shares in their preferred companies. It also has a tax filing feature that enables users to file their federal and state taxes on the go at no extra cost, making it preferable.
Cash App Vs PayPal: Pros
Cash App
- Cash App offers free ATM withdrawals for funds deposited directly into the app accounts: With Cash App, you can enjoy free ATM withdrawals for $300 or more deposited directly into your Cash App account. Usually, Cash App reimburses up to 3 of your ATM withdrawal fees and $7 of each ATM withdrawal fee every 31 days if your direct deposits amount to at least $300.
- Its essential services are free: Cash App doesn’t charge its users for sending and receiving money from other Cash App users using their Cash App account balance, linked debit card, or bank account. It also doesn’t charge people for cashing out their Cash App account balances if they use the standard transfer option. Finally, Cash App doesn’t charge users any maintenance or inactivity fees.
- Cash App offers a debit card to users: This app has a free, customizable debit card called Cash Card. With this card, you can withdraw money from your Cash App account at an ATM and make online and in-store purchases at participating stores.
- You get a cash bonus if your family and friends join Cash App using your referral code.
- It has a tax filing feature: One of the highlights of Cash App is its tax filing feature that enables users to file their state and federal taxes from the comfort of their phones.
- Cash App offers discounts to Cash Card users: This app provides discounts, called Cash Boosts, to users with Cash Cards, giving them a chance to save money on their expenditures.
PayPal
- PayPal is accepted in many countries across the globe: Perhaps the main advantage of PayPal is that it is accessible in more than 200 countries and regions worldwide and supports 25 currencies. This enables users to send and receive money from people around the world.
- Some of its services are free: There are no charges for receiving money on PayPal unless there’s a currency conversion involved. Sending money to friends and family in the US using PayPal is free if you do so from your linked bank account, PayPal account, or an Amex Send Account. It’s also free to purchase using your PayPal funds as long as there’s no currency conversion involved.
- Offers a variety of discount deals and rewards: PayPal gives its users a chance to get discounts at participating stores. Moreover, users can also earn reward points that they can redeem for cash-back offers when they buy eligible items.
- PayPal offers users a line of credit: This app provides individuals with a reusable virtual line of credit (they don’t offer an actual credit card) built within their PayPal digital wallets. With this line of credit, you can stretch your payments on your purchases at participating stores over time. All you need to do is use the PayPal credit option at the checkout section.
- PayPal also offers debit cards: Like Cash App, PayPal has an optional free debit card that people can use to make purchases using their PayPal account balance and withdraw at any ATM that accepts MasterCard debit cards. And the best part? Users get a chance to earn cash-back offers on eligible purchases.
Cash App Vs PayPal: Cons
Cash App
- Cash App account funds are not directly covered by FDIC insurance: Since Cash App isn’t a bank, it is not directly insured by the FDIC. However, through its partner banks, eligible Cash App account funds are covered by FDIC insurance up to $250,000. So, if Cash App happens to go out of business for any reason, you can only recover up to $250000 on your Cash App account, that is, if you have a Cash Card.
- Stock and Bitcoin investment funds are not FDIC-insured: Money earned through stock and Bitcoin investment on the app isn’t FDIC-insured, placing people at risk of losing their money if Cash App shuts down.
- Cash App is only accessible in the US and the UK: Unlike PayPal, Cash App is only available in the UK and the US.
PayPal
- Like Cash App, PayPal isn’t directly insured by the FDIC since it’s also not a bank: But PayPal has partnered with FDIC-insured banks to cover eligible PayPal accounts (those with a PayPal debit card) up to $250000.
- Easily limits accounts and freezes funds: PayPal is very strict about limiting accounts and freezing funds if they suspect fraudulent activities on an account. If they suspect any questionable activities with a particular PayPal account, they limit it and freeze the money for approximately six months or more. The disadvantage with this is that, in most cases, there’s nothing suspicious going on in most PayPal accounts, so your money might be held for no good reason.
- Its international transaction costs are quite high: While PayPal users enjoy the benefit of sending money and receiving money from other countries worldwide, the app charges high transaction fees for international transactions. For instance, if you want to make a foreign currency transaction, you will pay a currency conversion fee of about 3-4% and any other relevant service charges.
Cash App Vs PayPal: Pricing
With Cash App, you can send money using your Cash App account balance, a linked bank account balance, or a debit card at no extra cost. However, you will incur a 3% fee if you send money using a linked credit card.
On the other hand, PayPal doesn’t charge you for a domestic transaction, that is, if you send money to another PayPal user within the US using your PayPal account balance, a linked bank account balance, or an Amex Send Account. However, if you send money using a linked debit or credit card, you will incur a 2.9% fee and a fixed fee based on the currency received by the other PayPal account.
Suppose you send money to a PayPal user from abroad using your PayPal account funds, linked bank account, linked debit or credit card, or an Amex Send Account. In that case, you will be charged a 5% international fee, which is a minimum of $0.99 to a maximum of $4.99.
Remember that you’ll still pay the 2.9% charge and a fixed fee, based on the currency received if you use a debit or credit card to send money abroad.
Cash App doesn’t charge its users for receiving money. PayPal also doesn’t charge people for receiving funds into their PayPal accounts as long as there’s no currency conversion involved.
Currency Conversion
PayPal charges a 4% conversion fee for making purchases in a currency other than the currency in which the services or goods are listed. This fee also applies if you send money to a PayPal user in a country with a different currency.
Bank Transfer
Cash App and PayPal have two options for cashing out your PayPal account balance to your linked bank account. The standard transfer option in both apps is free and takes about 1-3 business days to process.
Then there’s the instant transfer option that lets you cash out your account balance. Cash App charges a 0.5-1.75% (a minimum of 25 cents) fee, while PayPal charges a 1.75% fee (a maximum of $25) depending on the amount you want to transfer.
Cryptocurrency & Stocks
Both Cash App and PayPal charge a transaction fee based on how much cryptocurrency you buy or sell. Both apps also don’t charge users for holding their cryptocurrency.
They also don’t charge users for transferring or receiving crypto from another account on both platforms. However, Cash App and PayPal will charge you a cryptocurrency network fee for withdrawing your crypto to another account outside of both platforms.
Cash App doesn’t have any commission or trading fees for investing in stocks on the app. But government agencies involved may charge you trading fees.
ATM Withdrawals
Cash App charges a $2.50 fee for an ATM withdrawal, and you may also incur extra charges from ATM owners. However, the app doesn’t charge users for withdrawing money (at least $300) deposited directly into their accounts through checks or other methods. Normally, the app reimburses up to 3 ATM withdrawals and up to $7 ATM fees per 31 days.
PayPal also charges a $2.50 fee for domestic ATM withdrawals. However, it doesn’t charge users for withdrawing funds at Money-Pass ATMs.
Regarding PayPal’s line of credit, the platform doesn’t charge users an interest rate if they manage to pay their credit balance within the stated period (six months.) The app’s credit APR is 26.24% for new accounts and charges a late payment fee of up to $41.
Cash App Vs PayPal: Pricing Comparison Table
Here’s a head-to-head comparison between these two apps’ pricing for their services.
| Cash App | PayPal | |
| Sending money | No charges for sending money using Cash App’s balance, or a linked credit or debit cardA 3% fee for sending money using a linked credit card. | There are no charges for a domestic transaction using a PayPal account balance, linked bank account balance, or an Amex Send Account. A $2.50 fee and a fixed fee, depending on the currency received for sending money using a linked credit or debit card. A 5% international fee for sending money abroad using a PayPal account balance, linked bank account balance, or an Amex Send™ Account. A 5% international fee and a 2.9% fee plus a fixed fee, depending on the currency received for sending money abroad using a linked credit or debit card. |
| Receiving money | No charges | No charges as long as there’s no currency conversion involved |
| Money transfer | No charges for the standard transfer option. 0.5-1.75% fee for the instant transfer option. | No charges for the standard transfer option. 1.75% fee for an instant transfer fee option. |
| ATM withdrawals | $2.50 plus additional charges from ATM owners. No charges for withdrawing money (at least $300) deposited directly into your Cash App account. | No charges for withdrawing money from MoneyPass ATMs, $2.50 for domestic ATM withdrawals, and extra fees from ATM owners. $3 over-the-counter transaction fee$2.5 foreign transaction fee for withdrawing money at non-US ATMs. $2.50 ATM withdrawal fee for withdrawing at a non-US ATM. |
| Cryptocurrency investment | Transaction fee depends on how much cryptocurrency is bought. A network fee will be charged for cryptocurrency withdrawals to an outside account. No charges for transferring cryptocurrency within the app.No charges for holding cryptocurrency within the app. | Transaction fee depends on how much cryptocurrency is bought. A network fee will be charged for cryptocurrency withdrawals to an outside account. No charges for transferring cryptocurrency within the app. No charges for holding cryptocurrency within the app. |
Similarities Between Cash App and PayPal
As P2P payment apps, Cash App and PayPal have several similarities in the services they offer:
- Receiving money: Both apps don’t charge users for receiving money. For PayPal, it’s free to receive money from other users unless there’s a currency conversion involved.
- Sending money: Both apps allow individuals to send money using a linked bank account balance, credit, and debit card.
- Money transfers from app accounts to bank accounts: Cash App and PayPal have the standard transfer option, allowing users to transfer their funds at no extra cost.
- Both are not directly insured by FDIC: PayPal and Cash App are not directly insured by FDIC. But they have partnered with FDIC-insured banks, allowing funds in eligible accounts to be insured up to $250000.
- Both apps offer their users an optional, free debit card.
Differences Between Cash App and PayPal
As expected, PayPal and Cash App have a couple of differences:
- Availability: PayPal is available in over 200 countries, while Cash App is only available in the US and the UK.
- Credit Cards: PayPal offers a virtual line of credit while Cash App doesn’t.
- Cryptocurrency investment: PayPal allows individuals to buy, sell, and hold up to 4 cryptocurrencies, while Cash App only enables users to invest in Bitcoin.
Who Wins: Cash App or PayPal?
| Cash App | PayPal | |
| Best for | Individuals looking for a diverse online payment app that offers more features than the basic payment ones. | Individuals looking for an established and dedicated online payment app. It’s also suitable for those looking for an app that isn’t limited to the US. |
| Top Features | Sending and receiving money. An optional free debit card (Cash Card). ATM withdrawals using the Cash Card. A tax filing feature. A stocks and Bitcoin investment feature. | Send and receive money both locally and internationally. A virtual line of credit. Make purchases both locally and internationally. An optional free debit card. A cryptocurrency investment feature. |
| Availability | US and the UK | More than 200 countries |
Cash App and PayPal both offer top-notch online payment features. However, Cash App takes a notch higher with tax filing and stock investment features. Sure, it’s not accessible in many countries like PayPal, but it is more versatile.
On the other hand, PayPal has been around for a very long time, reassuring users that it is a great online payment app. Its availability in many countries worldwide is a plus.
Moreover, the virtual line of credit, which enables users to get goods or services now and pay later, gives it the edge over Cash App. However, its reputation for having stringent rules regarding limiting accounts and freezing funds is a huge downside.
It’s also not as diverse as Cash App in terms of its services. Judging by all these considerations, Cash App is the winner here.
Why Is Cash App Better Than PayPal?
Cash App has the edge over PayPal because of its versatility. Cash App comes with a tax filing feature, allowing individuals to file their taxes quickly and at no cost, making it preferable. Cash App is also not as strict as PayPal regarding limiting accounts and freezing money, giving it the upper hand here.
Why You May Still Want to Choose PayPal?
PayPal offers exceptional online payment features, making it a great choice. The fact that it is accessible in more than 200 countries is a plus. And it allows users to invest in up to four cryptocurrencies, giving it the edge over Cash App.
Summary
Cash App and PayPal are no-doubt top-tier online transfer apps. They both have excellent features that have made digital payment easier. However, if you’re looking for a more versatile P2P online payment app that goes beyond offering online money transfer features, Cash App is the one you’ve been looking for. But if you want a more dedicated online payment app that is not limited to the US, PayPal is an excellent choice.
