https://square.com/cash
http://www.marketwatch.com/story/the-fastest-way-to-send-money-electronically-2013-11-05
April 21, 2014, 9:33 a.m. EDT
Square, Google, Paypal, Popmoney — who’s faster?
Testing the best way to send money electronically
Startups, web giants and even major retailers are introducing tools that promise to make sending money electronically as easy as downloading a book — a welcome change for consumers, since electronically transferring cash to a friend can take the better part of a week.
But instead of competing with each other, some of these companies may be joining forces soon.
Mobile payments startup Square Inc., which is known for its tools that helps small business owners handle credit card transactions, may be looking to be purchased by a rival with deeper pockets, The Wall Street Journal reported Monday. Square denied the acquisition rumors but the possibility draws attention to the fact that each cash-transferring service has its strengths and weaknesses. Square, for instance, has strong ties with brick-and-mortar shops, while Google has more virtual wallet customers, the Journal noted.
But which service offers consumers the easiest way to send friends money electronically?
In an earlier story, we explained how part of the reason computers move money so slowly is that banks still rely on 1970s technology. But with a growing number of services vying to become the new go-to way to message money, MarketWatch decided to take the tech for a test spin.
We sent $10 from New York to a colleague, multimedia producer Billy Higgins, in San Francisco five different ways: through PayPal, Popmoney, Google Wallet GOOG +0.26% , and the recently launched Square Cash. As a control, we also sent $10 by putting a good, old-fashioned check in the mail. All of these transactions were initiated at 3 p.m. eastern on a recent Friday afternoon.
We chose Friday for a reason. The banks’ money-moving system, known as the Automated Clearing House, processes transfer requests in batches just once a day, and anyone who misses a bank’s cutoff time has to wait until the next business day. The computers essentially go fishing on weekends and holidays.
So it wasn’t surprising that with the exception of one service, Square Cash, the transfers didn’t make it into Higgins’s bank account until at least the following Monday. The rest of the services took one or two business days to clear, but since the transfer was started on a Friday afternoon, they really took three or four days to complete. Popmoney and PayPal both cleared by the following Monday and the Google transfer was done by Tuesday. Bottom line, Square Cash was the easiest transfer to set up and the first to be completed. Here’s how each transfer went:
Square Cash
In addition to being the first to clear, the Square Cash transaction was also the easiest to set up and was free. To initiate the transfer, we just sent Higgins an email stating the amount of money we wanted to send him in the subject line and copying cash@square.com. Soon after, we got an email from Square with a link to a site where we could enter our debit card information. He got a similar link, entered his card info, and the transfer was set in motion. Square wouldn’t say whether it uses ACH for these email-based transfers, though it does rely on it for other services.
Unlike most of the other services we reviewed, Square did not require us to create an account or break out our checkbook and routing number. That made the task fairly straightforward, but it also left us a little nervous that anyone who hacked into our email account could theoretically empty our bank account. Square says its fraud team uses tools to prevent “bad actors” and that users can opt to get text message alerts any time they complete a transfer. We would have needed to give more identification information if we were going to send more than $250. (Square caps cash transfers at $2,500 a week.)
Popmoney
The next best service seemed to be Popmoney. We created an account on Popmoney.com to send Higgins the money, but people who use Citibank or several other banks that partner with the service can actually initiate transfers from their bank’s website. Once Higgins created an account linking his bank, he was able to accept our transfer request with a few clicks, and the money was in his account by the next business day, Monday. But if we and Higgins had missed Popmoney’s cutoff times for sending money, the transfer could have easily taken a few days more. Same if we were sending more than $500, which would have required us to send the money from our bank account, not our credit card, a change that also comes with a slightly slower delivery time. Popmoney says payments coming from a bank account can take up to three business days, while those coming from a debit card are typically delivered the next day. Popmoney also charged us a fee of $0.95 for sending the cash. Receiving money is free.
Google Wallet
Sending cash through Google Wallet required a little more work, but we were done in about 10 minutes. Once we said that we wanted to send money to Higgins by clicking the dollar sign button at the bottom right corner of the email message box, the site asked us for details to confirm our identity, such as the last four digits of our social security number and our billing address. We also had to re-enter our password. These extra steps were comforting.
The biggest hurdle with Google is that the site doesn’t allow money to be sent directly to a person’s bank account. The money is almost instantly available in a person’s Google Wallet balance, but the recipient then needs to say they want to transfer that money to their bank account. And they need to provide their checking account information to do so, causing further delays for the average person who rarely carries a checkbook around on a regular basis. After Higgins did that, it took two business days for the money to show up in his account. Google doesn’t charge a fee for sending money from a bank account, but people sending money from a debit or credit card have to pay a fee equal to 2.9% of the transaction, or a minimum $0.30.
PayPal
Using PayPal has similar drawbacks to Google Wallet. While the money instantly showed up in Higgins’s PayPal account, he had to then request that the funds be transferred to his bank account. Once he did, it appeared in his bank account the next business day, Monday. PayPal says the transfer normally takes two to three days. On the other hand, sending money that is already in a PayPal account can be faster than sending money from a bank account, the company says.
For the latter, the bank will automatically but a hold for the amount in the person’s account, but the entire process can take up to three business days, says PayPal. Higgins had the money in his account the following business day. Like Google, PayPal doesn’t charge to send money from a bank account, but charges 2.9% of the total amount sent from credit or debit cards, plus $0.30 per transaction.
Snail mail
The tech startups can rest easy. The handwritten check, which arrived at Higgins’s office the following Wednesday, turned out to be the slowest way to send money. The rest of the transfers had been deposited in Higgins’s account by then. But they didn’t beat the check by much: The transfer from Google had cleared just the day before. And if the money exchange had been happening across the office and not across the country, using the check might have been as easy as handing Higgins a $10 bill. The check cleared in his account the same day he deposited it, avoiding the lag of some of the more high tech transfer services. And the only fee was the cost of the stamp it took to put the check in the mail, and the cost of the time it took for Higgins to go downstairs to his local credit union and deposit it.
