What Are the Best Ways to Send Money to an Individual?
With the rise of mobile payment options, you might decide to pay someone using your phone and never open your wallet. Figuring out the easiest and safest way to transfer money can be tough, though.
To send money to friends, consider using the way that’s most popular among the group. For Nicki Patel, who lives in Dallas, that happens to be Venmo, one of several smartphone apps that can be used to send mobile payments.
“In my friends’ circle, we use it all the time,” says Patel, who works as the director of operations at Strauss Marketing Public Relations. When she goes out to dinner or to the movies with friends, one person foots the bill. Everyone else pays their share using Venmo.
If you’re looking for a convenient, safe and fast way to send money to friends, here’s an overview of online and mobile money transfer tools and how they differ.
Online and mobile apps
Venmo: This app lets you send money from your Venmo account balance, a bank account, debit card or credit card to a friend’s Venmo account. Your friend can then use that money to make a future transfer or “cash out” and deposit it into a bank account. You can also request money. On Venmo, you can send your friend a message when you request or send money and see other messages from Venmo users on a Facebook-like news feed. After Venmo resolved some security gaps earlier this year, users can set up a personal identification number, or PIN, when logging in and be notified of any changes to their account settings. Venmo is owned by eBay’s PayPal unit.
PayPal: Like Venmo, sending money through PayPal puts cash into recipients’ PayPal accounts. You can transfer money online or by phone to anyone with an email or mobile phone number using the app, email or text message, but the recipient must have a PayPal account to receive it. One advantage is its ability to transact with people outside the U.S.
Square Cash: This system, offered by Square, a mobile payments company, only lets you transfer money from a debit card. When you receive money, it goes directly into the account linked to that card, giving you immediate access to it. One way to transfer or receive funds is by creating a web address, called a cashtag, which uses the dollar sign and a name as a marker (i.e. “$cash”). You can then use the mobile app or email by inserting an address in the “cc” box, “email@example.com” to send and “firstname.lastname@example.org” to receive money.
Google Wallet: Since releasing Android Pay for retail and other purchases, Google has announced that its mobile payment app Google Wallet will only be available to transfer money person to person. Similar to PayPal, you can send money to anyone with an email address, but the recipient must open a Google Wallet account to receive the funds. You can also send money as a Gmail attachment by clicking on the “$” icon and inserting an amount.
TransferWise: If you’re thinking of sending money abroad, one relatively cheap option is TransferWise. This is a UK-based peer-to-peer transfer service available as a website and mobile app. You can send and receive money in more than a dozen currencies for a small percentage or flat fee. For example, it costs $3 to send up to $300 from the U.S. to England and 1% to send up to $5000. You cannot transfer within a single currency, though.
All five of the these apps incorporate technology to encrypt, or scramble, your financial information during transactions, which helps to ensure they’re the safest way to send money. PayPal and Google monitor for fraud around the clock. Venmo uses what it describes as “bank grade” security systems, and Square employs the same fraud detection for personal users and businesses. All are available for iOS and Android phones.
Other options: Social media companies are entering the mobile payments market too.
Facebook added a payment option June 30. In a private message, you can now use a debit card to send or receive money from your Facebook friends. It can take up to three business days for a transfer to be processed. Currently, the service is available only in the U.S. and does not support credit cards, prepaid debit cards or PayPal.
Snapchat recently partnered with Square to create Snapcash, letting friends send money through temporary messages, or “snapchats.”
Transfer money between banks
Direct bank transfers: Your bank can typically move funds from your account to another, whether in house or at a different institution. Because the funds are processed through the Automated Clearing House network used by banks, this is also called an ACH transfer. Direct deposits and direct payments between institutions and people also go through this network.
Wire transfer: This method is the electronic equivalent of a cashier’s check, meaning that the funds involved must be available for use. It’s one of the fastest, but also most expensive, ways to send money. A wire transfer can be sent between two people’s banks or, through agents like Western Union and Moneygram, directly to an individual. Be sure you know the recipient before sending money to avoid getting scammed.
Here’s a chart of some of the main ways to send money online to friends:
|Type||Delivery speed*||Cost per transfer||Transfer limit||Withdrawal limit||Place||Payment method|
|Venmo||At least 1-2 business days, depending on the time of transaction||Free if from Venmo balance, linked bank account or one of 30 financial institutions’ debit cards
3% of amount for using credit card or other debit cards
|Initially: Under $300
If account is verified: Under $3,000
|Initially: Under $1,000 per week
If account is verified: $3,000 per transaction & under $20,000 per week
|U.S.||App or website|
|PayPal||3-4 business days||Within U.S.: Free if sent by bank account or PayPal balance; $0.30 + 2.9% of amount using credit or debit card
International: 0.5%-2% of amount from bank account or PayPal balance; 3.4%-3.9% using credit or debit card, plus currency exchange fees
|$10,000 per transaction (or the equivalent in foreign currency)||Initially: $500 a month
If account is verified: unlimited
|U.S. & abroad||App, website, email or text|
|Square Cash||Almost instant or up to 2 business days||Free||Initially: $250 a week
If account is verified: $2,500 (in most states)
|Initially: $1,000 per 30 days
If account is verified: unlimited
|U.S.||App, website or email|
|Google Wallet||Almost instant to several business days||Free when using bank account or Google Wallet balance
2.9% of amount for using debit card
If account verified: $10,000 per transaction & $50,000 per 5 days
|$10,000 per transaction; $50,000 total for 5 days||U.S.||App, website or email|
|TransferWise||2-3 business days||Varies by currency||$1 million||Not applicable||U.S. & abroad (for international transfers only)||App or website|
|ACH transfer||1 to several days||Depends on the bank||Not applicable||Not applicable||U.S.||Website or bank’s app, if available|
|Wire transfer||same day||Close to $50, and both sender and recipient pay a share||Not applicable||Not applicable||U.S. & abroad||Website or bank’s app, if available|
*These are the general time frames in which funds are delivered to a recipient’s account. The speed can vary by transaction and time of day, as well as by destination and financial institution (if applicable).
As paying in paper cash becomes less frequent, knowing how to transfer money to someone online can help you avoid unnecessary fees.
Image via iStock.