Has the Paypal Killer Finally Arrived?
Since Paypal’s debut in 1998, it has become a dominant player in online payments, second only to credit cards. However, many people take exception to Paypal’s tagline, 'the world’s most loved way to pay and get paid.' Actually, some of us spew coffee all over everything when we read that. That's why I'm glad that some serious competition is arising. Here's what you need to know about Square Cash...
It's Cool to Be Square
Part of Paypal’s success is due to its acquisition by eBay in 2002 and its consequent entrenchment as the only way to pay or get paid on eBay. Paypal has also expanded into non-eBay markets including face-to-face transactions as well as remote, online and mobile transactions.
The fees that Paypal charges to recipients of money are a constant source of complaint; they range from 35 cents plus 2.9% per transaction, down to nothing in the case of “sending money to friends and family,” provided you don’t send more than a few hundred dollars per month and your family-friend isn’t Walmart.com. That's roughly the same fee schedule that merchants who accept credit cards must pay.
Merchants will always complain about the cost of getting paid, of course, neglecting the lightning speed and luxurious convenience of electronic funds transfer (EFT). Paypal certainly beats the usurious and unsafe wire transfer services such as Western Union’s Moneygram. But there are less expensive money-transfer services than Paypal, as we will see later in this article.
Delays of 3-5 business days in transferring money from one’s Paypal account to a bank account, and vice versa, are another sore point with many people. Paypal transfers cash to and from a bank account via the Automated Clearing House (ACH) system’s slowest but most inexpensive boat. One’s money is in limbo, neither spendable nor earning interest, for several days.
This suffering is alleviated somewhat by the Paypal Master Card debit card, which is actually issued by FirstBank, a nationwide commercial bank. With this easily-acquired card one can spend money received via Paypal instantly without transferring it to a bank account. But replenishing a Paypal account with funds from a bank account remains a waiting game.
When it was virtually the only reasonably priced EFT game in town Paypal was pretty high-handed in its dealings with customers. One can still find thousands of horror stories about Paypal account balances, often in the thousands of dollars, being suddenly frozen for up to 180 days while Paypal investigated transactions for fraud or just setting off an automated “unusual activity” alarm. That arrogant attitude has changed dramatically as competition has arisen, but there are still relics of it lurking deep within “the system.”
None the less, I have been longing for an alternative to Paypal; something simpler, less burdened with terms-of-service, and most of all free to me and my payees. Way back in 1993 I wrote, “The Internet operates on the same principle as Santa Claus and Jesus: ask, and ye shall receive.”
Is This the Paypal Killer?
Introducing Square Cash, a person-to-person money-transfer service of Square, Inc., a major provider of merchant services such as credit card processing. Their slogan indicates the ease of use you can expect: "You don’t sign up, you just send an email." Go watch the demo and see how easy this is compared to Paypal; don’t blink or you might miss it.
Yes, really, this is all you have to do to send money to someone with a U. S. bank debit card:
- Address an email message to the intended payee
- Add firstname.lastname@example.org to the cc: field
- Enter the amount you want to send on the subject line, e. g., “$50.”
- Send the email.
The first time you use Square Cash you will receive an email from email@example.com which contains a link to a secure Web page. On that page you enter your debit card number; the name on the card; and the card’s expiration date. You only have to do this once; thereafter, just send the email described above.
Your payee will get your email notifying him/her that cash has been sent. You can add any text you like in the email’s body. An email from firstname.lastname@example.org will guide the payee to the debit card details entry page if he/she has not already registered a card associated with his/her email address.
Behind the scenes, Square simply charges $X to your card and credits the same amount to the payee’s card. It’s the same thing that happens when you swipe your debit card at the supermarket checkout stand. It happens pretty quickly too, unlike a Paypal transfer to bank account.
Someone over 1,500 miles from me used Square Cash to send me money at 4:29 p.m. on a Sunday. The money was spendable from my bank account before noon Monday – Veterans Day, when all banks are closed to the public. Obviously, they are not idle when closed. This “1-2 business day” clearing time will do for anything short of bail money.
Got Questions About Square Cash?
I did, after signing up and linking my debit card. The Square Cash website is designed to be minimal to the extreme, probably to emphasize how easy it is to use. But they could do a better job of making it easy to find help and account settings. For example, I was wondering: "How can I login and change the registered debit card?" At the very bottom of the screen, you'll find the Account link, which lets you create a password, update your debit card information, and optionally provide a mobile number for SMS notifications of your transactions. Unfortunately, there's no way to get a history of your transactions.
I also wondered: "Can I get a refund, or recover money if the payee never claims it?" This answer is buried in the Help link, also at the bottom of the page. Click that link, then "Troubleshoot Square Cash" and you'll learn that there is a way to cancel Square cash you've sent, if it hasn't been redeemed. Unclaimed funds will be returned to the original sender's bank account after 14 days. There's also a form you can use to initiate a dispute, if necessary.
Each Square Cash transaction is governed by the existing terms of your debit card issuer. Say goodbye to Paypal’s unique and voluminous term-of-service document. One set of rules is better than two, generally. I expect Square to start charging fees for use of Square Cash eventually. But for now, it’s totally free to both sender and recipient.
Give Square Cash a try, and tell me what you think! Post your comment or question below...
This article was posted by Bob Rankin on 19 Nov 2013
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Article information: AskBobRankin -- Has the Paypal Killer Finally Arrived? (Posted: 19 Nov 2013)
Copyright © 2005 - Bob Rankin - All Rights Reserved