If you aren’t familiar with Cash App, it is a cross between a financial platform and payment app. With Cash for Business your business can accept unlimited payments of any size using your email, $Cashtag, or cash.app account. Whether you’re selling products or services online, or sell products you make at a local market, using Cash App can add an additional payment option for your customers.
Cash App is a Block Inc. company (formerly Square Inc.) that offers services for both individuals and businesses. If you are considering Cash App for your business, make sure you review its business account offerings and compare it to other payment processing services or merchant accounts.
Pros Of Using Cash App For Your Business
As with any payment option for your business, there are pros and cons to using Cash for Business.
- Fast and easy setup
- Receive unlimited transactions
- Receive your money in 1-3 days
- No contract
- Accept debit cards, credit cards and some prepaid cards
- Receive money from users who don’t have cash app
- Get unique Cashtag linked to your account
- Tax documentation
- Limited to sending $7,500 a week through the app
- 2.5-2.75% transaction fee
- 1.5% transaction, or $0.25 minimum, on instant transfers (deposits) to your bank
- Can’t schedule payments
- Limited customer support
- Responsible for customer chargebacks
- Receipt requirements for sales over $15
- Certain industries not eligible
- Can’t make or accept overseas payments
- No FDIC insurance
While the 2.75% transaction fee Cash App charges may seem high, it is worth noting that competitors such as Stripe, PayPal, Zelle, and others have transaction fees as well. The 2.75% fee is not outrageous for the space. In terms of an annual fee, there is no Cash App business account fee. (And if your business accepts credit cards, you’re used to paying merchant fees.)
Here’s the biggest risk of using Cash App for your business: scams and unauthorized charges. There is concern over security protections for small businesses (and consumers) who use the app.
A customer may dispute transactions and get their money refunded from legitimate transactions. A scammer may compromise your account. Someone may pretend to be from Cash App and try to get account information to gain access to your account.
Cash App has developed security measures to help reduce fraud. It recommends you take these two steps to help protect your account:
- Enable the Security Lock setting (which will require a PIN or touch ID). This should help ensure that every Cash App payment requires your passcode.
- Enable notification via text message or email so that you are notified after every Cash payment. You’ll find these in the profile section of your Cash App. Keep in mind you can’t ignore these alerts – you must respond very quickly to any fraudulent transactions.
- If you have a Cash Card, hide your virtual card. You can also disable your card as needed.
As a general rule, you must be very careful when using this and other payment apps in your business. Avoid providing your account information to others, including employees.
Using Cash App To Get Immediate Funding For Your Business
Cash App doesn’t necessarily allow you to immediately get funding for your business. But what it does allow you to do is get a payment service set up quickly so you can start selling goods/services, and then use the funds for your business.
All you need to set up your account is a bank account, email address, name, phone number, address, identification, and Social Security number (or EIN).
Once your account is set up and you have your unique cashtag you can set up payment links and start accepting Cash App payments.
Again, however, this is not without risk in terms of scams or unauthorized use so make sure you implement recommended security protections.
How To Change A Cash App Personal Account To A Business Account
If you currently use Cash App as a personal account and want to switch over to a business account, you can click on your account icon in the upper right hand corner, click personal, then click to change account type.
However, instead of switching your Cash App account from a personal one to a business one— which could get really tricky in terms of taxes and keeping your finances separated— you may want to open a new account with an unique username and business email address, and link it to your business bank account. (See fraud warnings and tips below.)
Not only will this help you when tax season comes around, or if you get audited by the IRS, but it will also make sure you are clearly seeing what your business is bringing in.
Note that as of January 1, 2022, business account holders that have over $600 in gross sales in 2022 will be sent a 1099-K form for tax reporting purposes.
Best Alternatives To Cash App For Your Business
While CashApp definitely has some advantages it won’t be the right choice for all business owners. Small business owners may prefer a platform where there are no limits on receiving and spending money or they may feel better with a more traditional point-of-sale system. Luckily there are plenty of alternatives out there for businesses.
Square is a popular payment option among many small businesses and it’s also owned by Block Inc., as is Cash App. Square charges transaction fees between 2.6% + $0.10 to 3.5% + $0.15. There are no chargeback fees or refund fees, there is a 1% per ACH payment with a $1 minimum and no monthly fees. They also offer hardware that can be synched with their platform which may be very beneficial to retailers and those that need a physical payment device. Square also offers a lot of add ons including email marketing, invoicing, payroll, and more.
Venmo is a popular alternative to CashApp. Business transactions carry a fee of 1.9% + $0.10 to 3.49% + $0.49. You can keep your personal and business account together with one username and password and just switch between the two. You are limited by Venmo’s other rules regarding sending and receiving payments. Similar to Cash App, it is not covered by federal regulations.
PayPal is another payment processing option for business owners. They allow business owners to connect to tools they already use, accept a wide range of payment options, have a payment plan option, and more. They charge anywhere from 1.9% + $0.10 to 3.49% + $0.49. They also offer tools to help with invoicing, reporting, analytics, and more. PayPal is global and also offers loans to businesses using their platform.
Another popular payment platform is Stripe. It allows companies to collect payments online and in person. Payment charges start at 2.9% + $0.30 and go up depending on if there is a currency exchange, international cards, additional payment method, etc. You can also get add ons to help with things like invoicing, taxes, billing, custom domain, and more.
Business Bank Account
Every business should have a business bank account. For some businesses, their business bank account will meet their needs without the use of other payment apps. For others, those apps will complement the bank account.
Either way, it can be a good idea to have money for your business deposited into your FDIC insured bank account so you’ll have a central place to track your business income. (Keep in mind FDIC insurance does have limits.) You then may want to have your Cash.app account access a sub account of your bank account in which you keep more limited funds so you’re not unnecessarily risking funds.