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Venmo vs. PayPal vs. Square: which mobile app is best for paying friends?

Reporter Kristin Wong compares three smartphone apps that let you transfer money to friends: PayPal, Square Cash and Venmo.

Let's say your co-worker picks up the lunch bill and you owe him cash. You could head to the bank, or write a check -- you remember checks, right? Or…you can phone it in.
Smartphones make it simpler than ever to pay our bills, deposit checks and now, transfer money.
We got mobile user Mike Karaba to help us test three popular apps that let you pay friends by phone: PayPal, Square Cash and Venmo. Up first, PayPal.
Kristin: So let's start with the PayPal app. We both have it downloaded on our phones. And you already have PayPal, right?
Mike: I do.
Kristin: So once you downloaded the app, you were able to just put your user ID in there?
Mike: My info, exactly. Simple.
Kristin: So we both have PayPal open, and you're going to transfer money.
From the app's menu, go to Transfer, then add the recipient's email from your address book and the dollar amount.
Mike: Confirm. Payment sent. Success.
And what about security? Like the other apps, PayPal does not store your account information on your phone and it encrypts all transactions. Even if someone steals your phone, they'll need your username and PIN to access your PayPal account.
You should always lock your phone when you're not using it too, for extra protection.
PayPal allows for multiple funding methods, including bank accounts, credit cards and debit cards. International transfers are also available.
Chances are, your friend already has a PayPal account, but even if they don't, you can send money using their email address or mobile number and they can sign up for an account to retrieve it.
The cons? If you use a debit card or credit card to fund your PayPal account, there's a fee of 30 cents, plus 2.9 percent of the amount transferred. Also, transfers take three to four days and are deposited into the recipient's PayPal account, not their bank account, adding an extra step to withdrawal.
The second app we're going to try is Square Cash.
Mike: So all I see right now is a dollar sign. I'm going to put a dollar in there. Hit send. See what happens.
Mike: It's very direct. I'm liking this already. Then it's asking me for the security code. So I hit send.
Kristin: And I just got an email from Square Cash saying Mike Karaba has sent me one dollar.

To send money using Square Cash, all the user has to do is draft an email to the recipient – either within the app, or from your email account -- just CC cash@square.com if you're using that method. Enter the dollar amount in the subject line, hit send, and the transfer is on its way. Square will email you asking for a debit card number if it's your first time using the service.
Mike: Very immediate. You open the interface, you get to put a dollar in there, you hit send, its there.
Because Square Cash can be used from any email account, it shares whatever security vulnerabilities your email account has. The company says it encrypts your card number, and it sends you an alert whenever you transfer money, giving you a chance to cancel the transaction. Square Cash also says it monitors for fraud and will reverse transfers if fraud is suspected.
Square Cash is completely free, and very easy to use. The recipient doesn’t even need to download the app to get the transfer. If they're a Square Cash newbie they'll get an email asking for their debit card number; the money will be directly deposited into their account and posted the next day.
But there's currently no support for credit cards, and it's only available in 48 States. Hawaii and Tennessee residents can't send cash, but they can receive it.
Next up, Venmo. You can sign up using your Facebook account, or an email account if you want to keep things on the down-low.
Kristin: We've both downloaded Venmo to our phones and added each other as friends. Venmo is kind of like Facebook, for money.
Mike: It has that feel to it. You can even like or comment on it.
To make a payment from Venmo, go to the friend menu, select your friend, then select the new payment icon. Enter in a dollar amount and a description, select pay, then send payment.
Mike: Pay, send the payment. Reasonable I would say.

Venmo uses 256-bit SSL encryption to transmit your personal info and it guarantees all user funds against unauthorized charges. If you happen to lose your phone, you can log in from a computer and revoke access to your account.
Some pros of Venmo? It's free if you fund your account with a debit card or checking account. It's also easy to withdraw money. Transactions typically post to your account the next day. But it's only available in the U.S. and there's a 3 percent fee for transfers funded by credit card.
Mike: Whoever is making these apps has to find the right balance of making it immediately accessible and having enough safety measures in there. Just enough…
Kristin: My favorite of the three: Venmo. Despite its limits, Venmo is relatively easy to use. I feel like my data is safe and transfers are quick. In the end, an excellent balance of security and convenience.

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