How do you get paid?
I’m talking to solopreneurs, freelancers, nonprofit organizations who want to collect payments or donations quickly and provide low-barrier options that go beyond checks or cash.
Enter alternative payments like Venmo, Cash App, and Zelle. They are part of a group of payment types called peer-to-peer, or P2P.
Although they are hardly entrepreneurial startups (Venmo is owned by PayPal; Cash App by Square; and Zelle, a partnership of major banks, Mastercard and Visa), they are recognition of the dynamic expansion of mobile technology, and another sign of the diminishing place of cash and checks in daily commerce.
While they be similar, they have significant differences.
Ease of use
While all three have mobile apps for all platforms, Venmo clearly states that its business program is designed for online purchases only, not mobile. Cash App and Zelle are both good mobile apps, but Zelle can be found either in your online banking app or in a Zelle-branded app. Cash app lets the consumer connect a credit card, which might be a plus for clients who prefer credit to debiting their bank accounts.
Ease of setup
The setup for both Zelle and Cash App is relatively simple. Either through the app or online, establish an account, link it to the receiving account (your business bank account). Cash App has a few more steps and also more options. Set up your username or “cashtag” (i.e. $laurahnj), and you get a cash.me page, where customers can pay online without having a Cash App account of their own. Venmo offers more features and is, therefore, more complex. You might need help.
This is always a concern with solos, small biz and NGOs. No business wants to pay fees. If that’s your situation, then Zelle is for you. Venmo charges a 3% fee; Cash App a 2.7% fee on banking transactions or a 3% fee if you accept credit cards. Although fee-free, Zelle may limit the number of transactions or the dollar amount per day, as set by your bank. Cash App limits you to a very low $1,000 per 30-day period. You can get it increased, but Square Cash will ask for more information about your business, to verify they won’t get stiffed.
Here Venmo rules. Its more-robust implementation means more programming options on the back end. Again, you might need help setting that up. If you use online banking with your Zelle-partnered bank, the transaction just appears as another deposit into your account. Cash App has no real integrations or tracking.
My opinion is that using Zelle through a partner bank’s already secure(ish) app would be more secure than creating a third-party connection to your bank account. Having banking information for your business (or your customers’ data) on external servers adds a layer of concern.
Cash is not dead but it’s not well either
Consumers most popular payment forms
54 percent — Debit card
26 percent — credit cards
14 percent — cash
Source: TSYS 2018 U.S. Consumer Payment Study – https://www.creditcards.com/credit-card-news/payment-method-statistics-1276.php
Mobile wallets gaining among GenXers and Milennials
27% of users 18-24 use debit cards via digital wallets
3% of users over 65 use debit cards via digital wallets
10% of millennials use digital wallets exclusively
Maybe because we can’t find places to use them
36% of merchants report they accept digital wallet payments
Within that number, however, 56% of large businesses do; only 25% of small businesses.
Source: https://www.creditcards.com/credit-card-news/payment-method-statistics-1276.php (JP Morgan Chase study)
What’s in your wallet?*
29 percent rarely or never carry cash
Of those who carry cash, the average amount at any time is $25
61% of 2,000 surveyed believe cash will disappear
*NYPOST story on Capital One research: https://nypost.com/2018/03/22/americans-barely-carry-around-cash-anymore/