FinCap Friday: Peer-to-Peer Apps Go Head-to-Head | Hosted by @missbehelpful

Summary

In this FinCap Friday episode, Yanely Espinal discusses the rise of peer-to-peer payment apps like Venmo and Cash App. She highlights their growing competition, with Cash App attracting more users in 2019, as well as unique features like bitcoin integration and prepaid debit cards. Espinal emphasizes the importance of transferring funds to your real bank account to avoid allowing the apps to collect interest. She also touches on security concerns, advising users to only send money to trusted individuals and set up security measures like a PIN. The episode wraps up with a call to use the apps’ free features for added safety.

Takeaways

• 😀 Venmo was the first popular app to simplify peer-to-peer payments, but CashApp is now gaining popularity.
• 😀 Venmo’s user growth in mid-2019 was 1.7 million, while CashApp’s was 2.2 million, showing CashApp's growing market share.
• 😀 You can store money in Venmo or CashApp, but transferring it to your real bank account is recommended to earn interest.
• 😀 Leaving money in Venmo or CashApp means THEY earn the interest, not the user.
• 😀 You can transfer money from these apps to your bank account for free in 2-3 days, but instant transfers come with a fee.
• 😀 If you don’t have enough funds in your bank account, you can use a linked credit card, but this incurs a higher fee.
• 😀 CashApp gained an advantage over Venmo by adding Bitcoin support and issuing prepaid debit cards with rewards.
• 😀 In response to CashApp’s success, Venmo added similar features, like Instagram copying Snapchat’s stories.
• 😀 Venmo’s reputation is also impacted by reports of users losing thousands of dollars and poor customer service.
• 😀 Connecting apps like Venmo and CashApp directly to your bank account poses risks, especially from hackers.
• 😀 For added security, set up a PIN code on the apps and only transfer money to people you know and trust.

Q & A

What makes Venmo a popular app for peer-to-peer payments?

Venmo was one of the first major apps to simplify the process of asking friends to pay you back, making it easy and socially acceptable to handle small payments between friends.

How do Venmo and CashApp differ in terms of user growth?

In 2019, CashApp's user base grew by 2.2 million, surpassing Venmo's growth of 1.7 million users during the same period, indicating CashApp's rising popularity.

How can users store or transfer money in Venmo and CashApp?

Users can either keep money within the app for later use or initiate a bank transfer, which typically takes 2-3 days and is free of charge.

What financial benefit does transferring money to your bank account offer?

By transferring money to your bank account, you can earn interest on those funds, whereas Venmo or CashApp collect the interest if the money remains in the app.

What is the fee for instant transfers in these apps?

If users want to access their funds immediately instead of waiting for the standard transfer period, they must pay an instant transfer fee.

What options are available for users who don’t have enough money in their bank account to send a payment?

If a user doesn't have sufficient funds in their bank account, they can link a credit card to pay, though this option comes with a higher fee.

What features does CashApp offer that give it an advantage over Venmo?

CashApp has gained an advantage by introducing bitcoin transactions, prepaid debit cards, and offering rewards for purchases made with those cards, features that Venmo later started to replicate.

How has Venmo responded to competition from CashApp?

To stay relevant, Venmo began adding similar features to their app, such as offering prepaid debit cards and integrating bitcoin transactions, following CashApp’s lead.

What are some of the risks associated with using Venmo and CashApp?

Both apps have faced criticism for security issues, including cases where users lost money due to hackers gaining access to their accounts and transferring funds to other bank accounts.

What precautions can users take to secure their accounts on these payment apps?

To improve security, users should enable a pin code for access and only send money to trusted individuals. Using free features of the app and avoiding linking accounts to risky or unknown entities are also recommended.