Like nearly every other aspect of our lives these days, the act of payment has gone digital. Payment apps have risen in popularity over the years and are now a main source of financial transactions.
The advantage of using payment apps is obvious: they offer a quick, easy and convenient way to send money without having to worry about carrying a credit card, stopping by the ATM or, dare we say, write a check. In addition, many of these apps have evolved to include other financial features including credit lines, debit cards and even stock market investments.
Of course, nothing is perfect, and there are certain pitfalls to be wary of. To get a better sense of the pros and cons, here’s a rundown of the top payment apps’ notable advantages and drawbacks.
Founded in 1998, PayPal was one of the original payment services to be widely adopted. As such, the app has expanded to reach 325 million users across 200 markets around the world.
Today, in addition to its user-to-user money feature, PayPal offers a host of other financial services. Most notable is the ability for users to purchase products online through their PayPal accounts. The company also offers individual lines of credit.
It’s not all positive, however. PayPal charges a fee to send money unless you’re using a linked bank account or the funds in your app account. Another downside is that it can take up to three to five days to transfer funds from PayPal to your bank. If you want it moved immediately, it’ll cost you 1% of the amount being transferred.
Venmo is an app that allows users to send and receive money through bank accounts, credit cards or Venmo account balances. It is owned by PayPal and very similar to it, but has some notable differences. One such feature is that it offers a free debit card, funded by the user’s Venmo account.
Arguably the best thing about Venmo is its popularity. It has about 40 million users, so odds are that whenever you need to send or request money from someone, it can be done quickly and easier through the shared app.
On the flipside, Venmo’s main drawback is its fee. The payment app charges a 3% fee for all credit card transfers and a 1% fee to get money to your bank account instantly.
Zelle is a money transfer service offered by most major banks, including Discover. All you need to sign up is an email address and/or cell phone number (and a bank account). You can set up your account through the app or your bank.
Because the money is transferred directly into your bank account, and not a third party service, you’ll usually have access to the funds within minutes and not days. This is a significant advantage of using Zelle.
That said, you can only fund payments with this app through your bank account. You cannot connect a credit card, so you’ll need to always have enough money in your bank account.
Apple Pay is a payment service rolled out by the tech giant a few years ago. It allows users to send and receive money through Apple’s Messages app, almost like you would send a text message. The app is compatible with the latest versions of the iPhone, iPad, Apple Watch and Mac computer.
Not only can you send money virtually, you can use Apple Pay at many retailers. As long as you have your device, you can just hold it near the reader for a cashless – and contactless – transaction. According to Apple, 74 of the top 100 merchants in the United States accept this form of payment, including CVS, Target, Best Buy and 7-Eleven.
The obvious drawback to this app is the need for an Apple device. If you, or the person you’re sending or receiving money from, doesn’t own one of the previously mentioned gadgets, Apple Pay is not an option.
Google Pay is the company’s equivalent to Apple Pay. Unlike its rival’s app, however, Google Pay is compatible with both Android and Apple devices.
Other than that, the two services are very similar. Google Pay allows users to transfer money to each other, and you can also use it for payment at participating retailers.
The app has many of the same drawbacks as its competitors, namely its fees. You’ll be charged a 3% fee to send money via credit card and a 1.5% fee for an instant cash out deposit.
Cash App is part money transfer app, part bank account. Not only can users send and receive money, the service allows them to get paychecks and tax returns deposited directly into their accounts.
A unique feature of this payment app is the ability to invest account funds in the stock market. Users can invest as little as $1 in individual stocks, giving them the potential to earn money. Cash App also offers its users a free debit card, which can be used to spend their account balances at different retailers.
Learn about all the ways AAA and Discover can help you handle all of your financial needs.