All free money transfer systems (Venmo, Cash, PayPal, Apple Pay, Facebook, Google) have two distinct limitations. First, they often limit the amount you can transfer per week. Secondly, their terms of service forbid you from using their “Free/Personal” versions for business transactions. Of course, the odds that you will get caught are very low, but if you tried to use this as you primary means of business payments, you would certainly run into problems down the line. Usually, the penalty for getting caught violating terms of service is that the transaction will be reversed.
So, if you want to send/receive money remotely for business transactions, you have a few options.
Option 1 – Use the “Business” version of a pay sharing app.
While Venmo, Apple, Google, and Facebook are strictly consumer apps, both Cash App and PayPal have options to process the transaction as a business transaction. This means that they will charge a percentage fee for the transaction, just like a credit card processing fee, and it will no longer be a free transaction. All things considered, this is not a bad option, since its the same as accepting payment through credit card, where the recipient pays the fee. If the recipient anticipates this fee, then (s)he can increase the cost of the service just slightly to compensate for that cost.
Now, in all honestly, if this payment is a one off, and you choose to violate terms of service by sending it as a personal payment, it’s very unlikely you will get caught. (Plenty of people do this.) However, if this is going to be a regular payment, or you will be doing business with this person often, then it’s better to adopt a more responsible method.
Option 2 – Write a check
Unlike the rest of the developed world, the USA still uses paper checks. Why? Because the government and banks refuse to allow a system where you can instantly wire money from one account to another for free. (Most developed countries already have this). Instead, in the US they prefer to either charge a fee for the transfer, or they impose a regulatory delay, so the transaction can be “approved.” This is what we know of as the ominous “2 to 3 business days.” So, after we accept that delay, we are left with 2 options for free transfers.
The old fashioned way is to write a check and mail it, or physically hand it to your freelancer. Hopefully they can use a mobile banking app to deposit the check virtually. No fee. Just time. But, in my opinion, there’s a better way.
Option 3 – Free bank transfer through a bookkeeping app
Some accounting apps provide free ACH transfers as an available payment method on invoices. This means that when you send an invoice to the client, they have the option to make a free guest account–or they can also use an account they already have–where they can add details for a checking account, allowing them to make free payments in the future.
Anyway, this is a great app for anyone looking to work with freelancers in the long run, and minimize both processing fees, and legal risk.
No get out there and make something cool!