Wealthsimple is a Canadian fintech unicorn that is disrupting Canadians' banking and investing routine. Currently valued at CAD 5 billion, the company initially provided a low-cost digital investing platform that permitted millions of Canadians to start trading with just a few dollars and no requirement for minimum balances. Today it makes filing taxes, paying bills, and opening accounts more convenient and cost-effective for Canadians. Its latest product is Wealthsimple Cash and it is another game changer.
What is Wealthsimple Cash?
With the Wealthsimple Cash app, you can spend and earn better interest rates on your deposits. It’s a hybrid account: it earns high-interest but it is also a chequing account that lets you access your money any time. You can pay your everyday expenses, and like other Wealthsimple accounts, you are not required to maintain a minimum balance. It also has no monthly fees.
How is Wealthsimple Cash Different from a Chequing Account?
Wealthsimple explains that chequing accounts are generally used to pay for everyday expenses including rent, groceries, and utilities. Most banks pay you a nominal interest rate on your chequing account that can barely beat long-term inflation rates. While inflation goes up, your chequing account balance stays the same, which creates a spending power imbalance. Normally, earned interest could offset this, if you could get a high enough rate. High interest is usually reserved for savings accounts, and those usually have restrictions on the number of monthly transactions.
This is where Wealthsimple Cash is different. Here, your chequing account balance grows at a rate that is competitive while the funds remain easily accessible to pay for daily expenses. You gain back some financial power. If you need a joint checking account, Wealthsimple Cash lets you open one.
The Wealthsimple Cash App is Safe and Convenient
In addition to earning higher interest rates, the Wealthsimple Cash app also facilitates peer-to-peer payment transactions. You can now log in to the mobile application and send money instantly to your friends and family.
In order to use the app, you need to download it and set up an account. If you already have a Wealthsimple account you can integrate it with the Cash app. Once the account is created, users can add money to Wealthsimple Cash and import their phone contacts which permits them to instantly send and receive money.
Is Wealthsimple Cash Secure?
There is very little friction between setup and being ready to send money. Using biometrics and fingerprint ID, Wealthsimple Cash keeps your identity and your money safe without relying on secret questions. Add to that the benefits of two-factor identification, and you might start liking your banking app for more reasons than before.
Another innovation is that you don’t have to release your name to anyone. You assign yourself a handle, much like you would on social media. This way, you can control who knows your name when you transfer money: you can have privacy. All you have to do is provide your unique Dollar $ign.
An offshoot of this drive for privacy, and one of the most interesting features is that you can control who can find you on the app. You can remain anonymous, which is hard to imagine in our digital world.
Furthermore, your Wealthsimple Cash deposits are insured by the Canada Deposit Insurance Corporation (CDIC). Your joint-account is insured to $100,000 in deposits, and so is your sole ownership account.
A Canadian Venmo Alternative
Wealthsimple Cash is built for convenience above all else. It’s not only a prepaid card like Koho. It offers more options for you to manage your cash and it also takes the best features of other fintech and bundles it with your chequing account. For those Canadians looking for a Venmo alternative, this is it.
First, it is faster than what you might be used to when using e-transfers. It's similar to an Interac e-transfer but it is instantly credited or debited from your account. You don’t have to worry about the time it takes your bank account to record the expense. It happens so fast that you always know how much money is left to spend. While several banks have a limit on the amount of cash you can send, Wealthsimple Cash allows you to send $5,000 daily with a monthly limit of $20,000.
Second, you can split your restaurant bill or concert ticket expenses with friends. Splitting a bill usually means “I will pay you back.” When, where, and how can test a relationship. Instead, Wealthsimple Cash lets you pay your portion of the bill at the right time and from your account.
Third, Wealthsimple Cash can be easily integrated with other investment accounts provided by the company, making it a “one-stop-shop” for your financial needs. However, Wealthsimple Cash offers more than just integrating your account under one financial umbrella.
Wealthsimple Cash Gamifies Saving
Actually, it’s gamification of your financial life. What is gamification? It is the same principle as what makes you try to unlock prizes or level-up in a game or reward system.
If you have $100,000 in net deposits across a Wealthsimple Cash and a Wealthsimple Invest & Save account where you are the primary or sole owner, you can upgrade to Wealthsimple Black, a premium service. If you are a secondary owner on a joint account, you also need to have a net deposit of $100,000 – meaning $200,000 in total for the both of you. Once you reach Black level, you benefit from lower management fees, dropping from 0.5% to 0.4%, on your investment account.
You also hit the motherload for tax planning. Usually reserved for the ultra-wealthy, Wealthsimple Black gives you tax-loss harvesting and access to tax-efficient funds. So your hybrid account, which earns you higher interest rates, can also help you to investor level where you benefit from tax-efficiency. That is even more money for you.
What's Next for Wealthsimple Cash?
Wealthsimple Cash is evolving and soon users will be able to pay utility bills, credit card bills, or any other bill, which will save the hassle of having to switch or transfer between accounts. More interestingly, soon you won’t have to pay any foreign exchange (FX) fees either. This might make travel less costly or be a gamechanger for sending money overseas.
Wealthsimple Cash: The Final Takeaway
Wealthsimple Cash succeeds at disrupting the traditional banking industry by providing a convenient and different way to bank and invest online. It’s unique in that it offers no fee transactions and no minimum balance requirements while paying you higher than normal interest rates on a chequing account. Wealthsimple Cash is loaded with convenient features, not the least of which is easy integration into the broader Wealthsimple family. Paying bills might never go away, but it might make financial sense for you to try Wealthsimple Cash to make all of your money go further.