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For merchant use, Cash App and PayPal may seem more similar than they are different. On the most basic level, both payment service providers are used to send and receive funds online and support bank transfers. However, you’ll find that the key distinctions between the two platforms can make a notable difference to business owners.
Whether your business is well established or just getting off the ground, finding the best payment solution for your unique needs is paramount. Let’s look at the different functionalities of Cash App and PayPal.
Cash App vs PayPal for Business Use
Selecting the ideal payment platform for your business is crucial. Cash App and PayPal offer convenient solutions, but understanding their differences can help you make an informed decision tailored to your business needs.
Cash for Business
At its core, Cash for Business (Cash App’s business service) is intended to facilitate fast financial transactions. Its convenient user interface allows instant fund transfers between your business and customers or vendors.
Cash for Business operates as a transaction hub for your small business. It allows customers to find your account through QR codes—which you can print out and post in a physical storefront—or by searching for your profile’s “$Cashtag,” email, or phone number.
The major advantage of Cash for Business is that instant deposits to linked debit cards come with low fees, meaning you’ll be able to access customer payments without delay. However, Cash for Business primarily serves the US and UK, so it’s not an option for many international operations.
All in all, Cash for Business is a highly convenient and easy-to-use service. Still, its simplicity is its greatest strength; however, it can also mean a lack of complex business functionality.
PayPal Business Accounts
PayPal was one of the earliest digital payment platforms available and remains an incredibly popular option for merchants—especially those with global operations, such as eCommerce retailers.
Much like Cash for Business, PayPal business accounts allow you to accept and send payments as an online service. However, PayPal diversifies its functionality by including more complex business tools such as invoicing, reporting, and eCommerce integration.
This, combined with the service, facilitates international transactions easily, making PayPal ideal for larger-scale operations or those with a global reach. However, the additional functionality accompanying PayPal’s service adds to the platform’s overall complexity. For instance, PayPal’s fee structure can be relatively complicated, and the service is reported to place frequent holds on business accounts. This can be extremely disruptive to daily operations as customers become frustrated, money is not exchanged promptly, and excess time is spent resolving issues with customer support.
However, despite these drawbacks, PayPal can be the ideal option for many businesses.
Cash App vs PayPal: Comparing Business Features and Services
Some of the differences between Cash for Business and PayPal are apparent. However, we’ll need to look deeper to determine which platform’s features and fee structures are ideal for your business.
Cash for Business and PayPal have quite a few significant differences. Business account owners need to understand these distinctions before they buy in. Let’s take a look at some key features to consider below.
Limits Imposed
Transaction limits are one of the biggest differences between Cash for Business and PayPal. Both platforms limit how much users can send and receive within specified periods. However, the quantities of these limits are vastly different.
Cash for Business allows unverified users—those who haven’t submitted their full name, SSN, and phone number—to send or receive up to $1,000 within 30 days. Once you become a verified user, you can increase your limit to $7,500 a week—with no restrictions on how much you can receive.
Alternatively, PayPal allows unauthorized users to send up to $4,000 monthly. Authorized users have no monthly or weekly limits; the platform only sets a single transfer limit of up to $60,000. So, if you’re operating a high-volume business or have significant outgoing vendor payments, PayPal might be the better option.
Fees and Costs
The two platforms also diverge when it comes to transaction fees. As a whole, Cash for Business comes with lower fees for most functions. Here are the numbers to help paint the entire picture.
- Instant Transfer Fees: Both platforms offer free standard transfers that typically take one to three days. However, regarding instant transfers, PayPal charges 1.75%, and Cash for Business charges 0.5–1.75%, depending on individual transaction amounts.
- Business Transaction Fees: Cash for Business will charge your business 2.5% per standard transaction and 2.75% if the customer uses a credit card. On the other hand, PayPal fees are slightly higher at 2.99% plus $0.49.
- International Transaction Fees: Cash for Business doesn’t facilitate transactions outside the UK and the US—so there are no foreign transaction fees. Meanwhile, PayPal charges between 4-5% for international transactions.
- Exchange Rates: Since Cash for Business doesn’t operate globally, it simply applies the live exchange rate and charges no additional service fee. PayPal, because of its global infrastructure, charges a 2.5–4.5% margin on exchange rates.
Security Measures and Fraud Protection
Cybersecurity remains a critical concern for many businesses. Payment platforms handle highly sensitive personal and financial information, which warrants advanced security measures. Regarding security, Cash for Business and PayPal are digitally robust. There’s no clear forerunner between the platforms, as both implement strong security measures.
Cash for Business has a PCI-DSS Level 1 certification, which is the highest rating. Furthermore, it complies with FINRA regulations in the US and FCA guidelines in the UK.
Meanwhile, PayPal complies with the Federal Trade Commission in the US, APRA and AUSTRAC in Australia, and the Financial Conduct Authority. The platform also audits transfers through its specialized fraud detection team.
Both platforms implement transfer notifications and employ two-factor authentication (2FA) measures.
Customer Support
Customer support is another key area for businesses. Problems with payment processing can disrupt purchases and dissuade customers from completing their sales journey. As such, having a responsive and simple way to resolve account issues is extremely important.
Luckily, this is another area where Cash for Business and PayPal are both meeting the mark. Cash for Business has a chat feature within its app, a customer support phone number, messaging options via its social media profiles, and even a mail-in option. Alternatively, PayPal has a message center on the platform, an option to contact support through its website or app, and messaging options via official social media profiles. The customer support option also provides a phone number if required.
Both platforms utilize similar outreach channels and typically receive comparable ratings in terms of responsiveness.
Transfers and Payment Speeds
Liquidity is important. Businesses need access to working capital to fulfill vendor obligations and pay operational costs like rent and inventory warehousing.
Payment processing speeds can improve liquidity instantly by reducing wait times for customer invoices and sales. Shorter wait times optimize cash infusions.
For the most part, Cash for Business and PayPal offer similar wait times. However, Cash App edges slightly ahead of PayPal in this area.
PayPal transfers are instant when funded from your balance or a credit card. However, if funded from a bank account and sent to another bank account, it can take four to five days.
Meanwhile, Cash for Business transfers are instant. Transferring to a bank account takes one to three business days. Instant transfers to a debit card are possible with a rush fee.
Accessibility
In terms of global accessibility, PayPal is the clear winner. The Cash for Business limitation will severely restrict your reach if you aim to target an international customer base. You’ll be better off going with PayPal—which hosts services worldwide.
Other accessibility metrics like user-friendliness aren’t quite as clear-cut. On the customer side, both platforms are fairly equal in terms of convenience and ease of use, but Cash for Business is slightly easier to operate from the merchant’s perspective. PayPal has more advanced features that facilitate more robust accounting, such as invoicing. So, the winner will depend on what you’re looking for in a platform.
Finally, it’s helpful to note that Cash for Business sticks primarily to P2P payments but has recently expanded to include business accounts and direct deposits.
Choosing the Right Payment Provider for Your Business
To put it succinctly, Cash for Business is likely the better platform if you’re looking for a simple payment option for US or UK sales and don’t need more complex functions like eCommerce integration. However, if you’re running a global operation or need features like invoicing, a wider array of payment options, or a higher transfer limit, PayPal will probably suit your needs better.
Both PayPal and Cash for Business have notable drawbacks for merchants. PayPal has some significantly high fees that could cut your margins. Cash for Business may cost less, but it’s missing many professional functions needed to operate or scale a business.
Instead of bending your business to work within these constraints, choose an online payment provider that better aligns with your operations. When you partner with PaymentCloud, your dedicated account manager will find the best options for your business according to your criteria.
PaymentCloud can evaluate your business needs and structure to create a tailored payment gateway that perfectly aligns with your intended purpose.
Take the next step and start accepting payments!
FAQs
Do Cash App and Paypal Offer FDIC Insurance for Your Funds?
For the most part, FDIC insurance doesn’t cover PayPal or Cash for Business funds. These payment platforms don’t operate as traditional banks, meaning any funds you leave in your Cash for Business or PayPal account aren’t protected by the FDIC depositor limit of up to $250,000.
If either platform were to go out of business, your account balance wouldn’t be insured, and you would likely lose money. For this reason, you shouldn’t leave large sums lingering in your payment platform account for extended periods. Instead, transferring your balance to an FDIC-insured bank account is safer.
However, both PayPal and Cash for Business offer specific services under FDIC protection. Namely, if you sign up for a PayPal Debit Card or Cash App’s Cash Card, your funds are covered by FDIC insurance.
Which App is Better for Businesses: Cash App vs Paypal?
The answer depends on what your business structure requires from a payment platform. If you need more advanced functionality, PayPal is a more suitable option. However, if you’re looking for a straightforward means of transferring funds, Cash for Business fits the bill.
Customer perception of the reliability of the payment platform also counts. First-time customers might see certain payment methods as less trustworthy than others. So, it’s important to factor this into your decision—especially if your business presence isn’t yet well established.
For example, among digital natives like Gen Z, 31% trust payment platforms less than traditional processing methods. However, PayPal’s growing brand presence could mitigate some of the hesitance to interact with digital payment platforms. Considering that as of 2021, five times more respondents used PayPal than even the ubiquitous Apple Pay, the platform might pull ahead of Cash for Business regarding customer perception.
Does Cash App Work With Paypal?
The answer is yes. You can leverage the advantages and mitigate the disadvantages of both platforms by using them in tandem with each other. This way, your customers can choose their preferred payment method at checkout. This can eliminate some sales funnel friction by empowering customers to pick an option they trust, are familiar with, and possibly already have an active account.
You’re demonstrating a heightened consideration for customer preferences by offering multiple payment options. At the same time, you’re positioning your business as a professional and reliable enterprise with established customer-facing infrastructure. This can be helpful for new small businesses trying to portray a sense of trustworthiness to customers.
Additionally, international operations that intend to make international transactions can leverage PayPal’s global infrastructure while taking advantage of Cash App’s reduced fee structure for domestic transactions.
Is Cash App Owned by PayPal?
No, PayPal doesn’t own Cash App.
Cash App was established by Square, Inc. (now Block, Inc.) in 2009. Alternatively, PayPal was founded in 1998, well before Cash App.
Both platforms live in the same market space but are distinct companies operating separate platforms and businesses.
