How Cash App Works

Cash App is essentially a digital wallet that allows you to ditch actual cash. Omar Marques/SOPA Images/LightRocket via Getty Images

Gone are the days when cash and credit cards were required to pay for services or loan friends a couple of dollars. Now, you can send funds back and forth on your phone using Cash App. It's a platform that allows you to send, save and even invest your money.

Cash App is a convenient service that's free and easy to use. Since being launched in 2013 by Square Inc., Business Insider reports the app has accumulated more than 24 million monthly active users. Haven't used Cash App before? No problem. We'll walk you through everything a beginner needs to know about Cash App.

How Is Cash App Different From Banking?

The main banking screen on Cash App
Screenshot by HowStuffWorks

Cash App is a peer-to-peer payment service that allows you to send, receive and request money. The money will appear in your Cash App account as credit. Another option is linking your account to an existing bank card and using it to transfer money to and from your Cash App account. Cash App is similar to other free money transferring apps like Venmo, Zelle, Dwolla and PayPal.

Companies pay Cash App particular fees so customers can use their phones to pay for goods and services. It's essentially a digital wallet that eliminates the need for cash or traditional credit cards. Although you're only able to spend $250 within a seven-day period and receive up to $1,000 within a 30-day period, your limits can be increased by verifying your identity.

Similar to other money services, Cash App will charge you a 3 percent fee for sending money via credit card. You will also be charged a 1.5 percent fee when opting for instant transfers from the app to your bank account. Luckily, this charge is avoidable by waiting two to three days through a standard transfer process.

All information that's submitted to Cash App is securely encrypted to servers, so it's safe for you to use on private or public internet connections. The app also can detect if fraudulent activity is happening to your account. Users can add extra safety to their account by enabling a security lock in order to make payments.

Cash App takes its financial services one step further and allows users to purchase cryptocurrency and trade stocks commission-free. You can invest as little as $1 into stocks and easily convert your dollars to Bitcoin with a few taps in the app. Additionally, you can track the BTC price, stock prices and monitor your overall investment portfolio in real time through the app.

How to Use Cash App

Cash App is free to download from the Apple App Store and Google Play Store. You start by creating an account and choosing a $Cashtag, which is a username that identifies your account. The app will automatically create a shareable URL so you can engage in transactions through the app. You can only change your $Cashtag twice, so make sure it's one that you're happy with,especially since businesses, friends and family will be seeing it.

After signing up, you can choose whether you want to link your bank card to the account. This will allow you to send and receive money from your bank account through Cash App. You can sign up for a free Cash Card, which is a virtual Visa debit card that can be used for in-store or online purchases. Cash App also can send you a physical card to use at any merchant.

There is an incentive related to the Cash Card that's worth considering. Users can earn Cash Boosts that will instantly save money on purchases at coffee shops, restaurants and other eligible merchants. All you have to do is pay with the Cash Card and activate the boost through the app

You can send and receive money by entering someone's username, phone number or scanning their QR code. Sending money to others takes only three steps:

Cash App send money screen — It's simple to send money to someone via Cash App.
Screenshot by HowStuffWorks

Enter the amount.
Select who you want to send the money to.
Tap "Pay."

To see who has sent you money, visit the Activity tab on the Cash App home screen. However, it can take one to three days for transactions to process if you don't pay for instant transfers.

Download Cash App to Get Started

Residents living in the United States and United Kingdom can download Cash App. You must be 18 years of age or older to apply for a Cash Card. All you have to do to sign up is enter your email or phone number, create a password and choose a unique username.

Cash App is a virtual wallet that you can use in stores or online. You can even receive paychecks, government stimulus payouts, tax returns and other income into your Cash App balance. You can learn more about what this service offers by downloading the app and searching online.

Frequently Answered Questions

Is Cash App a safe App?

Cash App is a safe app. However, you should always take precautions when using any financial service, including Cash App. When using Cash App, you should only send money to people you know and trust. You should also never share your Cash App PIN with anyone.

Can I use Cash App without a bank account?

Yes, you can use Cash App without a bank account. You will need to use a credit or debit card to add money to your Cash App balance or to send money to someone.