Money transfer applications make it easy and convenient to send or receive funds among family, friends, or even businesses through mobile devices and computers. These apps have not only grown in popularity but also in acceptance. One platform is even backed by large U.S. banks.

Transferring money over the internet via an app is called a peer-to-peer payment system. Usually, you link your debit or credit card or bank account in the app in order to move money at your request. Some services maintain an in-app account. There is usually a fee for instant transfers (30 minutes). Most apps do not charge for non-instant transfers, which can take up to three business days.

There are plenty of options available for a variety of platforms, so assessing your personal needs is important. Additionally, each service has differences in compatibility, fees, payment methods, account limits and security. Some services also allow for unique features, such as an associated debit card with retailer discounts, or the ability to invest through the app.

Overviews of the Money Transfer Apps

We looked at six of the most popular services. They are, in alphabetical order, Apple Pay, Cash App, Google Pay, PayPal, Venmo and Zelle. Which of these services best meets your personal needs? Read on to learn how they compare.

Apple Pay and Apple Cash

Apple Pay and Apple Cash are integrated services that Apple Inc. (AAPL) rolled out in 2017. The service is included in the iOS and MacOS. (A Mac model with Touch ID is required to add a debit or credit card in MacOS.) This means that iPhone, iPad, Apple Watch and newer Mac owners do not need to download an extra app to transfer money or make payments. However, this service is restricted to iOS, so customers can only send to or receive money from other iOS users. Purchases can be made on Macs, however.

There are no fees when using an eligible Visa debit card to send or receive money, with a $10,000 limit on transactions. Instant Transfer sends funds to the eligible debit card within 30 minutes. Otherwise, instant transfers incur a fee of 1% (up to a $10 maximum). Transfers to bank accounts are free and can take from one to three business days.

Apple Cash is a feature of Apple’s larger Apple Pay service, which allows iPhone users to make transactions online or in stores with their device. Adding debit or credit cards or bank accounts to your virtual “wallet” is simple and intuitive, a staple with Apple’s user interface. One benefit of Apple Cash is FDIC insurance, since the services are provided by Green Dot Bank. Apple Cash is currently a U.S.-only service, but Apple Pay is available in many countries.

Cash App

Cash App is a service developed by Square Inc. (SQ). It is available on iOS, Android and web browsers. It is free to download and use, but its services are only available in the U.S. or the U.K. Cash App allows users to connect debit and credit cards or do a direct bank transfer.

Transfers to a bank account take one to three business days but are free. Instant deposits to a linked debit card are charged a 1.5% fee. Otherwise, Cash App provides a debit card known as the “Cash Card,” free to order for all users. The debit card offers free ATM withdrawals if the user sets up direct deposit (otherwise, the charge is $2 per withdrawal). The Cash Card also offers discounts with certain retailers that are automatically applied to a purchase.

Cash App allows users to invest in stocks and buy/sell bitcoin; however, these services are not comprehensive enough to replace a brokerage account.

The service is not FDIC-insured. For security, Cash App uses data encryption and fraud detection technology. There are unique, one-time login codes and two-factor authentication.

Overall, the user interface is clean and simple to understand.

Google Pay

Google Pay is the money transfer and digital wallet service developed by Google’s parent company, Alphabet Inc. (GOOGL). It is available on iOS, Android and web browsers. It is free to download and use, and it works internationally.

Users can connect debit and credit cards or link a bank account. Credit cards have a fee of up to 4% and can only be used to make payments in stores. Credit cards cannot be used to send money to friends or family, and payments in stores can only be done with an Android device. When transferring to friends and family using a debit card, the app charges a fee of $0.31 or 1.5% of the transaction, whichever is greater.

There are no fees to transfer funds to and from a user’s bank account, with a maximum amount per transaction of $5,000. Transferring to a bank account can take up to three days but is usually instant when sending to a debit card. A maximum of $25,000 can be held in a user’s Google Pay account.

What used to set Google Pay apart was the way it integrated other Google services. Since July 2020, the only way to send and receive money is through the app or at https://pay.google.com. However, the service can be used with a variety of other apps, such as Airbnb, DoorDash, Fandango and others. Like Apple Pay, Google Pay can store gift cards, concert tickets and flight tickets/boarding passes.

Google Pay protects user info in several ways. It stores user information on heavily encrypted servers, and when purchasing, user’s credit card details are not sent to the merchant. Rather, the system creates a virtual account number for every transaction. Overall, cloud storage and data security are among the cornerstones of Google’s business.

It is a simple, quick-to-use service that is a great option, particularly for Android users.

PayPal

PayPal Holdings Inc. (PYPL) is the most well-known of the electronic payment services available to consumers today. PayPal originally gained its foothold among consumers as the payment app for transactions on eBay in the early 2000s. Now, PayPal has dipped its toes into the peer-to-peer payment system as the number of users and transactions has risen. PayPal is available on iOS and Android, as well as through web browsers.

Where PayPal struggles is with its hefty fees. Like other services, it allows users to send money for free for domestic personal transactions; however, these transactions must be from a PayPal balance or a linked bank account and confined to PayPal users in the U.S. If you opt to use a credit or debit card to fund your transactions, PayPal charges 2.9% plus a fixed fee of $0.30 for U.S. transactions. If you are sending or receiving money internationally, the fees can be even steeper depending on the location. Even personal transactions made internationally incur a fee.

Withdrawals to an eligible linked bank account are free when there is no currency conversion. Instant withdrawals to a bank account or credit or debit card incur a 1% fee.

An advantage that PayPal has over some of the other services is the large transaction capability: Customers can transfer up to $10,000. After starting as an online payment facilitator, PayPal has increased its capabilities to allow in-store purchases through their app. By scanning a QR code with the app, users can pay with their cash balance, bank account, or credit or debit card at various retailers. PayPal includes benefits that other services provide, while also having increased capabilities for payment and business operations.

Funds transferred to PayPal through direct deposit are covered by FDIC pass-through insurance.

Venmo

Venmo is a digital payment platform that has over 50 million users in the U.S. as of publication. The service was acquired by PayPal in 2013. In 2020, Venmo’s annual payment volume totaled $159 billion. The payment app is available across a wide variety of platforms including iOS, Android and web browsers.

Venmo’s distinguishing factor is that it is the most social of the digital wallet services available. Upon the initial setup, users are asked if they want to add people from their phone’s contacts and/or Facebook account to a Venmo friends list. If any contacts are on the platform, Venmo automatically adds them to the list to make transfers easier. This step is not required. Additionally, Venmo provides users with the option of making their transactions visible to the public, visible to friends or only visible to the sender and recipient (“private”). This preference can be adjusted at any time by clicking on “settings” and then “privacy” in the app on the website.

Those who receive Venmo payments will see the funds in their respective accounts and can transfer them to their bank. The service is designed to be used for everyday payments of smaller amounts; the rolling weekly limit is under $5,000.

Venmo is free to use with a debit card; a 3% fee is assigned to transactions using a credit card. Funds can be transferred into your bank account within one to three business days. Effective August 2, 2021, instant transfers will be charged a 1.5% fee (capped at a maximum of $15). For users who frequently use the service, Venmo offers a credit card with up to 3% cashback on purchases. Venmo also has a debit card with a similar cashback system. Venmo combines a digital wallet service with aspects of a social media app to create an environment that facilitates smaller and more frequent payments among individuals and their personal networks.

Cash funds held in a Venmo account are eligible for FDIC pass-through insurance if cryptocurrency was purchased or money was added to the Venmo balance via direct deposit or “remote check capture.”

Zelle

Zelle is a digital payments service that allows users to transfer funds instantly from one bank account to another. Zelle’s parent company, Early Warning Services LLC, is owned by seven of the largest banks in the U.S.

Transfers on Zelle can be done without needing extensive personal information such as bank account numbers. To initiate a payment, a user must have the phone number or email address of the person they wish to transfer funds to. Next, the recipient will receive a notification about the pending payment.

Zelle is embedded in the app and on the website of several banks. Recipients who have not previously used Zelle can register using their phone number or email address and receive a transfer at their participating bank. FDIC insurance is provided through the eligible account held at each user’s bank.

If the user’s bank isn’t partnered with Zelle, the Zelle app can be downloaded from Apple’s app store and the Google Play store.

Unlike other digital payment services, Zelle does not charge any fees. Transaction limits vary by participating bank. Furthermore, the funds transferred through Zelle are never placed in an intermediary account linked with the platform. However, users should be careful in making sure they send money to the intended person, as there are no grace periods on transactions. Rather, transfers can be accepted instantaneously by a recipient even if the wrong contact information was entered by the sender.

Users should be aware of scams and those trying to take advantage of Zelle’s ability to transfer money instantly. There is no safety policy in place to recover lost or stolen funds.

Table 1. Money Transfer App Comparison

Selecting a Cash Payment App

Discerning what makes one app superior to another is purely preference. Each app has its own niche specialties and potential drawbacks. While no one app is perfect, individuals should make their decisions based on their needs and the level of security they are comfortable with.

Key factors to keep in mind include costs and fees, security aspects, the size of the payments and who the recipients are. All of the apps use encryption, but money sent to the wrong person is often not recoverable.

Small payments to friends and acquaintances may best be suited for those services that can provide efficient transfer times at a relatively low or no cost. Conversely, larger and more important payments may require digital payment services with the fastest transfer times and most security.

Individuals may find that the best way to satisfy all their payment needs is to use a combination of apps. For example, an individual could use a mix of Venmo and Zelle, using Venmo to pay back acquaintances for smaller, more trivial items and using Zelle to pay larger sums, such as rent and other similar costs. Users may find that employing a combination of different digital payment services covers a wider range of their needs and may allow them to make more mobile payments at ease.

As digital payment services become a more common method of sending money to friends and transacting with businesses, users’ options will expand. Already, a wide variety of mobile payment apps with varying levels of differentiation are available to prospective users.

Regardless of which service is used, individuals should seek out the money transfer app that best fits their specific needs and consider using a combination of payment apps to achieve a maximum level of efficiency and comfort. 

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