When [company]Square[/company] launched its Cash peer-to-peer payments service last year, it made transferring funds as simple as sending an email. Apparently that wasn’t easy enough. A new update to Square Cash now lets customers transfer funds through a text message.
Square doesn’t use SMS to actually move money around. Rather, it links customers’ Cash accounts and their associated debit cards to a phone number – just as it previously linked them to an email address – and uses SMS as the notification and verification tool.
While Cash users could make an email payment through any web, mobile or PC email client, the SMS service requires the Square smartphone app (available on iOS and Android). You can send funds through the Cash client to anyone in your phone’s contact list or just enter a phone number. The recipient, in turn, receives an SMS notification of the pending transfer. If the recipient is a Cash user, the funds will automatically be deposited in his or her account (often as quickly as minutes, though sometimes after 1-2 business days). If not, the payee is prompted to create an account, either online or through the Cash app.
As I wrote before, Square is trying to bring its sleek and painless approach to point-of-sale payments to peer-to-peer payments, challenging [company]PayPal[/company] on its own turf. Cash was already easy to use, it’s becoming more functional with SMS support and the ability to attach notes to each payment, and unlike Square’s competitors, Cash still charges no transaction fees. But that simplicity also raises even more questions about how secure its network can be. Just as an email address can be spoofed, so can a phone number.
Square claims that it has much tighter security technology working in the background than the service’s simplicity would appear to suggest, and the same fraud protection systems that identify bogus charges on its merchant network are also monitoring the Cash network. Square also imposes limits on how much money can be transferred daily.
If you’re willing to put your trust in Square Cash, the service might be worth checking out — if only for the free $1 Square will transfer into your account for verification purposes.