What are the best cash apps and what are best practices for using them?

Ralph
00:00:00

Does sending money through cash apps make you nervous? Are you worried that you might get scammed or lose track of your business finances? Well, today I'm sharing a story about one of my clients who lost $5,000 through a cash app scam. More importantly, I'm going to share with you how you can protect yourself from experiencing the same fate while still taking advantage of these powerful financial tools. Get ready for a technology lesson today and plan to avoid getting scammed online. We're talking cash app security today.

Narrator
00:00:31

Welcome to the Ask Ralph Podcast where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep Jr.

Ralph
00:01:00

Well, thank you for joining me on your financial journey, as always. My goal today is to help you master your finances from that Christian perspective, and I am grateful you've joined me. And listen, I face the same challenges as you, so I understand the importance of giving you sound financial advice mixed with our faith. So let's get to that today. Let's talk about yesterday. Yesterday, we talked about the challenges of couples retiring at different ages, at different times in their lives. I provided some practical guidance for you to make that transition easier. So, if you missed it, I'm going to encourage you to go check it out.

Today, I've got a question from Michael in Atlanta, and this is what Michael says: "Ralph, I own a small landscaping business, and lately more of my customers want to pay through these cash apps. While the convenience is great, I'm concerned about security and proper bookkeeping. What's the best way to handle these digital payments while protecting my business?"

That's a great question, Mike, and I’ll get to an answer here in just a moment, but I just want to remind you, this show is built around your questions. So I encourage you to submit them at justaskralph.com, or you can join our live show tonight—every Tuesday night at 7:00 PM Eastern. You can join our live show to get your questions answered and join our community. You can get to that by going to askralphpodcast.com/live. It's a great place, like I said, to get your questions answered and interact with our great Ask Ralph community.

You know, Michael, I like to start off the program with some scripture, and your question reminded me of a perfect verse. It's really relevant for protecting ourselves because we don’t have to live in fear, but we do have to be aware and wise. This one comes to us—and I've used this on the show many times—it’s from Proverbs 22:3, and it tells us this: "The prudent see danger and hides himself, but the simple go on and suffer for it."

Well, wait until you hear this story. I told you I was going to share a story. We had this client; she had a business down in Memphis, Tennessee. She had a boutique, and she called me after she lost $5,000. Yes, you heard me right—$5,000 she lost in what she thought was a legitimate cash app transaction. She told me, "Ralph, this guy called me, posed as a wholesaler, someone I’d dealt with in the past." Now, this particular person wasn’t somebody she knew, but they were calling from that wholesale company. They told her they had a shipment ready for her, but it was being held because they needed an immediate payment, and they requested this payment via cash app.

She told me—and I remember hearing the tremble in her voice—she was just completely shocked, because she realized her money was gone. And, you know, it's interesting—I can still hear that voice; it haunts me. So I want to share this valuable lesson with you about these cash apps, but I want to start by talking about the four most reliable apps, which I call the "big four."

Many of these, if you’re familiar with the industry, you understand what these are. The first one is Venmo, which is perfect for personal transactions and splitting bills. I’ll get into the details a little bit later in the show. So, first up is Venmo, like I said—perfect for personal transactions and splitting bills.

The second one I'm going to talk about today is Cash App. It's excellent for quick transfers with added features. And before I forget, I just saw an article online today: if you were the victim of fraud with Cash App, I'm going to encourage you to check out their website because there’s some sort of class action suit going on right now. I don't know all the details, but I wanted to mention it, so go take a look.

Let's start with Venmo. Venmo is what they call your friendly neighborhood payment tool. A lot of people have used this. I know I go get my hair cut a lot of times by my son, my son's a barber here in Middletown, Delaware, and I'll shoot him a little tip through Venmo. And it's great for splitting expenses.

Like if you're out to dinner with somebody or like sharing a lunch bill or something like that, maybe a share utilities. And my son, my youngest son, is still on our cell phone plan. So every month he uses Venmo to send me his share of the cell phone bill because it's really convenient. It's quick and easy. But like anything else, it does have some risks.

And what are the things you don't think about with Venmo? All of those transactions are public by default, which is something kind of interesting when you look at it. So you could be a target. So the tip today I'm going to give you today is don't forget to categorize these items in your budget. That's one of my big takeaways today, one of the things a lot of people don't take into consideration, they use these cash apps, you know, hey, we mentioned this a couple times today. It's so easy to let that spending get out of control because you're not measuring it.

So I'm just going to remind you. Keep track of those. Because it's easy to forget about those and it, listen, this is one of my annoyance things with my clients who use them, my business clients to pay for people for their business, because I'm thinking you're not categorizing those. All the bank statement shows is Cash App or Venmo, and I'll pick on any particular one, but if they ever get audited, it's going to be an issue.

Well, let's look at number two. And that's Cash App. Now this Cash App is what is known for speed, has got low fees, and the coolest thing about Cash App, it goes beyond just sending the money. You can offer quick transfers, you can do some stock investments, and I'm even told you can do some Bitcoin, but again, that same risk of not tracking those expenses comes into mind.

So you got to monitor where your money is going and stay disciplined. Because even when using these cash apps, solid financial management is still critical. So don't lose sight of that. The third one is Zelle. Now the uniqueness of Zelle is that it's integrated with most major banks. So it's just like you're working with your banker transferring money from bank to bank.

So you're going to have that third-party intermediary like you have with the Venmo or the Cash App. And it allows for access to better online tools for tracking because it's going right through your bank account. And some would argue that it may be more secure because it's still in that bank-to-bank transfer.

And it's got a little bit of extra security, so that's Zelle. If you've ever used that one, you could check that out. A lot of banks are integrated with that. And the fourth and final one is PayPal. Now, if you know about PayPal, they've been around forever. Some people would call them the OG, they're the veteran of the apps.

It's true. Like Michael, for you and other business owners, you may be already using PayPal, or you may have used PayPal to pay somebody in the past. And the cool thing about PayPal, they've got a comprehensive set of features in there. Like I said, they're used by many businesses. And the thing I like about PayPal is they do have some robust buyer and seller security.

The other thing I really like about PayPal, from an accounting and tracking standpoint, is they have an integration right into QuickBooks Online. So you can connect your PayPal account and it'll actually drive those transactions right in the QuickBooks Online. You didn't know that as a pro tip, you can use today, but it will really help your accountant or your tax person at the end of the year.

And it'll help you manage your finances better because you're going to have those transactions brought right in. You might be asking, Ralph, what are the key differences to consider? Well, this is why you're listening. So I get right to it now. For personal use, here's my opinion. Venmo works best for social payments and recurring bills with friends.

It just does. It's very simple. If you're out to dinner with somebody and you want to split a bill or something like that, you can go right into Venmo and send it to them. Or if you're buying something small or you're sharing some kind of recurring bill with friends, maybe you bought concert tickets and you want to share the expense. I think that's where Venmo really is the best place to do that.

Now Cash App is known for its speed and additional investment options. So if you've got a need for speed, as they say, or if you've got some additional investment options, like I talked about, some stock investments, some Bitcoin, and Cash App might be better. Now, if you're really thinking about staying in that banking realm, then Zelle is ideal for that, because, like I said, it's those direct bank-to-bank transfers.

And a lot of people say, Ralph, to me, that's just more secure. I'm not using that third-party intermediary. And as always hilarious, when we talked about PayPal, and the truth is, and I have to say this, I agree with this, PayPal provides the most robust buyer and seller protections. They really do.

They've got a system developed that you can object to things. You can have it audited. You can have an intermediary work with you if there's something blows up. So for personal things, like I said, those are the things. Venmo for social payments, Cash App if you need that speed or that additional investment options, Zelle if you like those bank-to-bank transfers, and PayPal is like the OG, like I said, it's got the most robust buyer and seller protections. Now for business use.

I want to start by saying this. Just as we analyze spending habits and cash flow patterns, you'll want to consider that with this business thing. So I'm going to go say this and I'm going to say it strong. PayPal's extensive business tools and reporting features make it, what I think is probably the best for business use. Now, if you don't want to pay the fees of PayPal, because there are some fees, Cash App could be your next logical choice because of their lower fee structure.

But again, as an accountant, as somebody who works in this every day, make sure you're keeping track of what those transactions are for. I had a client in a couple of weeks ago, I was looking at his bank statement. It was Cash App, Cash App, Cash App, Cash App, Cash App. And I said to him, I said, dude, if you ever get audited, the IRS is going to have a field day with you because all it says is Cash App, Joe X.

Cash App, Sally Y. And they're going to say, are these people, employees, are they subcontractors? So you've got to keep track of that information. And on the business side, if you want that direct bank integration, Zelle's perfect. I have a lot of clients that use Zelle for transferring money between business accounts or transferring money between business and personal accounts.

Maybe they're taking an owner draw or something like that. That's great. And lastly, for business use. I'm not a huge fan of this. But, you know, the truth is you could use Venmo. One of the things that I did, I learned in my research was, you know, some people use this for customer engagement. That's fine.

I just think it's not quite the right thing to use for business transactions. But the key to all of this, the key to using these is you've got to implement proper tracking and categorization of expenses. And you got to make sure you're keeping your business and personal stuff separate, you know, and one of the people that I talked to, I was planning for the show.

I queried some people in the Ask Ralph Insiders group. And I'll talk to you about how to get involved in that later, but you've got to think of it as these cash apps are no more than digital envelopes for your money. So think about those traditional envelope budgeting systems, where you have so much money in an envelope for this, so much money in the envelope for this, you got to consider that these digital apps need to be treated the same way.

And you can't let those derail your intentional spending plan. I've seen so many people use these apps and their spending gets out of control because they're not paying attention to it. It's not coming out of their checking account. It's not hitting their credit card, so they're not managing that. They're not looking at that.

And it's an easy way to get your spending derailed and away from that intentional spending plan. Now, let me tell you what I did with my client to protect her business. So when she called me and she told me, they said, well, one of the things we got to do is we've got to prevent this from happening in the future.

So we did this, we enabled every available security feature. That was things like fingerprint recognition. We added two-factor authentication. Listen. Don't skip anything. It's like locks for your doors. If you have locks on your doors, if you don't lock them, they're not going to help you. Another thing I'm going to recommend you do is create unique, complex passwords for each platform.

I've done shows about this. So think about that key analogy. You're not going to have one key that opens up every single thing you own. You've got a separate key for your house, a separate key for your car, a separate key for your business office or your garage.

So use unique, complex passwords for each platform. Don't say, well, you know what, Rob, for every app that I use for transferring cash, I'm going to use cash1234$. That's probably not a good plan. And never ever, whatever you do, never share verification codes with anyone. They are never going to ask you.

This is crucial. If you get a text from somebody and they say, "Hey, I just need you to send me that verification code, I'm calling from your bank." Absolutely not. And the last but not least thing I want you to do is set up notifications for all these transactions. In each of these apps, you can get a notification. Like the other day, for example, my wife bought something for her mother. Her mother's in nursing care.

If you've been listening to the show, you know, she suffered Alzheimer's, and she said, "Ralph, I had to put this on our personal account, but it's really something my mom needs to pay for. How about I Venmo you the money?" And it was perfect because I got a pop-up on my iPhone. It says, you know, my wife's name is Jennifer, "Jennifer just paid you $27." And if you have those notifications, you'll know what's going on.

So if there is fraud, you can do something about it before it becomes this wildfire. Now let's talk a little bit about business best practices because it comes into this discussion at the same time. And this is one of the big things I see. And that's a commingling thing, which means you're mixing business and personal, and I see this a lot in the cash area, in these cash apps where somebody will say, "Yeah, well, you know, I've got my, I've got my PayPal connected to my business, but I had to buy this personal thing."

You've got to avoid that. You've got to make sure you're keeping those things separate. If you want to do PayPal for business and personal, create two separate PayPal accounts. Same thing with Venmo or the Cash App or Zelle. Keep them separate. It's going to keep you out of hot water with the IRS. And nobody wants to be in hot water with the IRS.

Another thing you must do as a business, and actually as a personal thing too, is document every transaction immediately. You're doing it for tax time. Yes, it's tedious, but it also helps you find fraud and you won't be in that situation. Listen. I meet with clients in February, March every year, some clients we don't do monthly work for and they come in, they give me all their bank statements and they say, "Oh, right." I go to work and I'm saying to them, "Okay, why open up your first one statements?"

And I see Cash App, Cash App, Venmo, Venmo. Who did you pay? And they look at me like, "Ralph, that was last January, or that was last March." So keep track of that stuff immediately. I am not a huge fan of using that for business. I think it's a huge audit red flag, but if you're going to do it, make sure you're keeping track of it.

Now, if you're going to offer this, like you talked about in your question today, if you're going to offer this as a payment policy, you need to make sure you completely lay out policies and procedures. You know, maybe like this fee contractor is a mini contract. You want to give your customers transparency.

A lot of people charge extra for these. If they're being charged a service fee from the vendor, they're going to charge that as well. So you want to make sure you lay that out to your customers. And last but not least, and I think I've hit this a few times, you've got to maintain detailed records for tax purposes.

The IRS is going to see these statements. If you get audited and if it just says, "Venmo - [someone's name]," that's not going to be enough records. But if you have that and you have a receipt that's attached to that, or you know what that was for, and you can document it, you'll be fine. But again, I'm not a huge fan of this.

And listen, as Christian business owners or individuals, we're called to be good stewards of our resources. And it means being wise about how we handle our money, even in this digital age. It's so important. I remember when I first started integrating cash apps into my own business practices, I made some of these same mistakes. And that's why I'm doing this show today because I want to help you avoid these.

And here's the thing, a big key takeaway. I've learned that convenience should never compromise security. Just like we lock our doors at night, we need to secure digital finances. Now I'm going to share some action items with you in a few moments. But first I want to ask you a few questions. Do you feel overwhelmed with your finances? Do you feel like you're all alone? Do you want to find that financial freedom?

Do you want to escape the bondage of debt? Do you want to align your finances with your faith? Do you feel like your dreams are slipping away? Do you live in financial instability? Do you feel like you're living paycheck to paycheck? Do you feel frustrated? Do you feel hopeless and do you feel stuck? Well, guess what? I got great news today.

There is hope. I want to invite you to join the Ask Ralph Show Insiders group. We've got a community of people who feel the same as you. These are people who are facing the same challenges. The only difference is they're mastering their finances from that Christian perspective, they're living their dreams.

They're finding peace of mind. Yes, they're feeling those same pain points that all of us feel, but they're seeking to balance their finances with their faith. And best of all, the Insiders group is sharing answers. We're sharing solutions and we're sharing hope. That's the biggest takeaway I can give you about the Insiders group.

We're sharing hope. So I'm going to encourage you to apply for our community. Just go to askralphpodcast.com/group and complete the questionnaire. Again, that's askralphpodcast.com/group. There's a questionnaire there. Do it now and become a member of the insider's team. Start promise you. I'll give you some actual steps.

So get ready to write these down. Number one, audit your current cash app security settings today. Take a look at how the settings are set up. Are you using all the security features? Do you have that multifactor setup? Do you have those alerts set up? Do you have all the possible security settings set up?

You're hiding your privacy, all that kind of stuff. Number two, if you're taking these for your business, create a written policy for digital payments. Lay it out, let people understand the process. Take a look at what some of those safeguards are that are offered by these companies. Number three, and I'm going to harp on this a bit, set up a dedicated business account for digital transactions.

If you're truly doing business with these cash apps—I keep saying cash apps, but you understand what I'm saying? The Venmo's, the PayPal's, the Cash Apps, the Zelle's. If you're doing them for business, set up separate accounts. Stop doing that commingling. You're going to thank me if you ever get audited. Another thing I'm going to recommend.

Number four: Implement a verification process for new payment requests. If you are working with new people, like you're in a landscaping business—you talked about that—one of the big things I would recommend is you have some kind of verification process to prove each other's identities out. So there's no questions.

And number five, and this one is critical. I want you to schedule weekly transaction reviews. Go into each of those apps, go into your bank statement on a weekly basis, and take a look at what's going on so that if you have some kind of strange situation—I'm not going to call it fraud, but something strange—you can nip that problem in the bud. Now, before we wrap up today, it's election day.

I want to emphasize the importance of voting today. Just as we make thoughtful decisions about our finances, we need to be equally thoughtful and engaged in our civic responsibilities. And no matter what people tell you, no matter where you live—you know, we live in Delaware, we don't have a big impact on the presidential race—but the truth is every vote matters. It just does. Every vote matters, and each vote impacts our economic future.

So you might be saying, Ralph, what's your key takeaway for today? Well, here's my takeaway: Be as cautious with technology as you are with cash, because remember this—knowledge is power. Ask questions. Do your research. Financial stewardship is all about taking ownership of your financial wellbeing.

You've got to do that. Now, on tomorrow's show, we're going to be tackling seven dangerous credit card debt myths that could be holding you back financially. You don't want to miss these eye-opening revelations. I want to lay some out there when I was preparing for that show for tomorrow that are really going to rock your world.

Remember, my passion is to help you achieve financial success. I want to see you live out your dreams. I want to see you growing your faith. And I know together we can master your finances from that Christian perspective. So as I always end the show, I'm going to encourage you to stay financially savvy. And may God bless you abundantly.

Narrator
00:20:58

Thank you for joining us on the Ask Ralph podcast. And with a simple click to subscribe, we'll invite you back to our next episode. And remember, financial issues don't have to be complicated, just Ask Ralph.

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