What Is Cash App And How Does It Work?

What Is Cash App?

Cash App is a digital wallet similar to PayPal, Venmo and Zelle. It allows consumers to use their Android or iOS device to make purchases rather than using a credit card or debit card. Users can also make and receive peer-to-peer (P2P) payments with their smartphones. Unlike many of these other mobile wallets, Cash App – officially Cash App Investing LLC – also allows users to buy, sell and send bitcoin and other investments. In addition, users don’t need to link their bank account to use the service. In fact, there are Cash App banking services in addition to the app itself. These services include the Cash App Card.

Is Cash App Safe?

Cash App employs a few key security measures to keep users safe. The app is built on a secure platform, where communication is key. Users receive suspicious activity notifications when security settings are changed, new logins are detected or money is sent internationally. When a new person (not in your contacts) is paid, the app will ask for confirmation before the money is sent. Cash App routinely asks users to verify their identity and gives them the power to control what information can be shared with other users.

While Cash App is not a bank, the financial platform has FDIC insurance through partner banks for those who use the Cash App Card. This insurance protects up to $250,000 per card user. This insurance is for card users only.

Of course, even with security settings in place, people can still be scammed. That’s why it’s important for users to take caution when using any financial app.

Watch For Common Peer Payment Service Scams

The goal of P2P payment scammers is to receive unauthorized money transfers from your account. The ways they may achieve this are:

Phishing: In this con, the scammer emails, texts or calls you pretending to be from your bank, lender, financial platform, the IRS or local police, then asks you for personal information so they can get into your accounts.

Remember that a financial or government institution will never reach out to you and ask for such information as your Social Security number or password to any account. Never click on any links sent via an unknown number or email address.

“Wrong” Transfers: You may get a payment from someone you don’t know, then a message from a user saying they accidentally sent their payment to the wrong person and asking if you could send it back. However, they may actually be using a fake account, with stolen money.

Instead of sending them money, tell them to contact Cash App to fix the problem.

Borrowed Phones: While you think the scammer is borrowing your phone to call or text a loved one in an emergency, they’re actually accessing your Cash App and transferring funds into their account.

Always be cautious when letting someone borrow your phone. If anything, offer to dial or text the number for them.

How Does The Cash App Card Work?

As a Cash App user, you’ll have access to request the Cash App Card. This card works just like a debit card – you can withdraw money that’s in your Cash App account from an ATM using the card. You can also swipe it at stores and use it online to pay for products and services. Before using the card, make sure you have enough money in your Cash App account – especially if you haven’t connected a bank to the app.

Using Cash App For Bitcoin And Stock Transactions

One of the ways Cash App stands out from other finance platforms is that users can make bitcoin and stock transactions using the app.

How Cash App Works For Bitcoin Transactions

Bitcoin is a cryptocurrency – a digital token – that you can invest in and transfer through P2P technology.

You can buy and sell bitcoin on Cash App using these steps:

1. Open Cash App and tap the Bitcoin tab.

2. Press “Buy” or “Sell” – whichever you want to do.

3. Choose the amount or enter a custom amount.

4. Confirm your purchase or sale with your PIN or Touch ID.

You must have money in your Cash App account to purchase bitcoin.

How Cash App Works For Buying And Selling Stocks

To make stock transactions using Cash App, follow these steps:

Buying Stock

1. Open Cash App and tap the Investing tab.

2. Search the company name or ticker symbol of the stock you wish to buy.

3. Select the company.

4. Press “Buy.”

5. Choose the amount or enter a custom amount.

6. Verify your personal information.

7. Confirm your purchase with your PIN or Touch ID.

Selling Stock

1. Open Cash App and tap the Money tab.

2. Press the “Stocks” option.

3. Go to Stocks Owned.

4. Press “Sell.”

5. Choose the amount or enter a custom amount.

6. Confirm your purchase with your PIN or Touch ID.

Profits from your sale may take up to 2 business days to show up in your account. It’s a good idea to work with a financial advisor before investing to determine the best strategies for your unique situation.

Is Cash App Free To Use?

Cash App is free to download and create an account, and some services are free to use. These services include sending and receiving money and buying or selling stocks.

However, other services incur fees. If you choose to use these services, you’ll pay a fee.

Credit Card Fees

While it’s free to send money through the app using a bank account or debit card, using a linked credit card will cost you. As with many other businesses, there is a charge to pay with a credit card – 3% of the amount sent.

Instant Transfer Fees

You can transfer money from your Cash App account to your savings or checking accounts by using the platform’s standard deposit, which takes between 1 – 3 business days.

However, if you want the money instantly, you can choose instant deposit, which may cost 0.5% – 1.75% of the amount transferred (with a $0.25 minimum fee).

Bitcoin Fees

There are two different charges you may incur when buying or selling bitcoin on Cash App. You may be charged an exchange fee between 0.75% and 3%, depending on the total exchange amount. The exchange rate may have a spread between 0% – 1% applied to it as well. 

Just like transfer fees for regular money, there are also withdrawal fees for bitcoin. And they also depend on a timeline. The standard deposit (transferred in 24 hours or less) is free. For rush deposit (transferred in 2 hours or less) and priority deposit (transferred in 10 minutes or less), there are fees that are based on each customer and on blockchain congestion.

Cash App FAQs

Knowing the answers to some of the most common questions about Cash App will help you determine if it’s the right app for you.

Do I need a bank account to use Cash App?

You do not need a bank account to use Cash App. If you don’t connect your bank account – or don’t have one – you can add money to your Cash App account by setting up direct deposit or depositing physical cash into your account at a participating retailer. 

Can I only use Cash App with other people who use Cash App?

You can use Cash App to send money to other people, whether they use Cash App or not. However, they’ll need to have or create an account to be able to accept the transfer of money. Be aware, if an account is not created or verified in 14 days, your payment will go back to you.

The Bottom Line: Cash App Can Be Convenient, But Play It Safe

Cash App allows users to send and receive money without requiring a connected bank account. The financial platform also provides investing opportunities – all under a secure platform that is free to use. While there are fees for some services, like instant transfers and exchange fees, just accessing the app won’t cost you.

Looking for other financial tools to add to your digital wallet? Download the Rocket Money℠ app to track your spending, discover your net worth and get assistance lowering your bills.