The popularity of mobile and online applications that facilitate peer-to-peer (p2p) money transfers has grown substantially in recent years. This is in large part due to the growing adoption of digital financial services: not only are people using cash less frequently, but they are also less interested in carrying around wallets filled with credit cards. The characteristics of sending money using p2p applications are also very compelling: they are cheap, more efficient, more convenient and in many cases more secure. The demand for p2p money transfer has led to many companies launching p2p applications over the years and there’s now more than a dozen choices available. In this article we will discuss three of the more popular applications currently available in United States: Cash App, Zelle, and Venmo. In totality these apps handle billions of dollars of transactions each year and have hundreds of millions of users.
Cash App is used by more than 40 million people across the United States and Europe, and according to its parent company Block, Inc., the application had users in each of the 50 states in the U.S. in 2021. All users need to start using Cash App is a bank account and a username (known as a $Cashtag). Users can send money using Cash App to other users in the United States and the United Kingdom at no charge. In addition, with Cash App users can receive their paychecks up to 2 days early and also get up to 3 ATM withdrawals reimbursed per month. This reimbursement is for customers that have $300 or more directly deposited into their Cash App account each month. Further, Cash App has expanded its services to include investing in stocks and also investing in cryptocurrencies such as Bitcoin. The limitation for Cash App is that you can only transact with other Cash App users.
Zelle works very differently from other payment applications as it is integrated with its partner financial institutions. This means that users don’t have to download a separate Zelle app to send money – but this is only the case if the user’s financial institution is part of the Zelle Network. For example, while today there are over a thousand banks that use Zelle, this is still just a fraction of all the banks in the United States. That said, one of the unique characteristics about Zelle is the fact that even if your financial institution is not part of the Zelle Network, you can still send and receive money by downloading the app and entering your debit card information. Zelle transfers are completed instantly and are free to both sender and recipient – this is another unique aspect of this payment service. With Zelle once you send (or receive) funds, the funds are available in your bank account within minutes, and you can make withdrawals or commence other transactions. The primary negative aspect of Zelle is the fact that it is only available in the United States.
Venmo has existed much longer than both Cash App and Zelle and was one of the pioneers of p2p money transfers. Today the app has 85 million users in the United States, more than double the number of users of Cash App. With Venmo you can send money to other Venmo users with no charge, and the company has expanded the number of transactions you can perform on the platform in recent years to include purchasing goods and buying cryptocurrencies. Venmo also now offers its users debit and credit cards. While it is free to send and receive money using Venmo, users can incur fees if they would like to withdraw their funds instantly. This is one of the main disadvantages of Venmo compared with Zelle which provides instant transfers for free. The other main disadvantage of Venmo is that it is currently only available in the United States and so users currently cannot send money internationally.
There are many p2p payment applications available to users today, and some of the other options not discussed include Samsung Pay, Apple Pay and PayPal. The main considerations are cost, speed and security. Zelle is easily the cheapest and fastest option, especially if the institution that provides your banking services is already a Zelle partner. For users that are looking for not just p2p transfers but also additional services, Venmo is a great option given its list of services which we expect to increase in the coming years. For people that are looking for low cost p2p transfers within the United States as well as internationally, Cash App is worth serious consideration – it is the only one of the three discussed p2p transfer applications that allows international transfers. While Cash App is only currently serving transfers to the United Kingdom, it could expand to more countries over time.