Cash App or Square Cash, the latest payment processing company is now the talk-of-the-town.
Online payment processing companies have seen a huge urge and growth over the last few years in every business type.
It is all because of the incredible convenience it offers to modern businesses, especially accessibility and faster cash flow.
PayPal, Moneybookers/Skrill, Google wallet etc. many companies have emerged due to this demand; you just name it.
These payment processing companies let you send money anywhere, anytime without having to go through hectic traditional process of banking.
Nobody, apparently has the time to stand in a queue at the bank these days.
These payment processing companies have shown how easy it can be to send or receive money.
Cash App first stepped into the market in 2009, holding the hands of its founder, Jack Dorsey and Jim McKelvey.
Jim McKelvey had troubles accepting a credit card payment while selling a piece of art.
This eventually led to the idea of Cash App, an easy payment processing platform, which is now surpassing expectations.
Surprisingly, Cash App is now apparently making more than $850 million every year with prospects of higher success.
Cash App has turned itself into one of the most popular and largest payment processing platforms in the US.
You can trade it as SQ in NYSE (NYSE: SQ).
Post this success, the company has now dabbled into other areas of business on the market with high potential.
It now offers several solutions to businesses such as employee management, business scheduling, analytics and many more.
Cash App’s Gross Payment Volume hit a massive $17.9 billion in 2017 Q4 in accordance to its SEC filings.
What Is Cash App?
However, companies like Cash App or Venmo is free to use if you use Debit cards, but will be charged in case of Credit cards.
As per Jack Dorsey, Cash App was initially a side hustle for him, which now delivers different business solutions.
Cash App makes money at least more than 1 of 3 customers using their services.
Cash App has made credit cards accessing easy for small businesses with its unique platform.
It has combined an elite integrated payment processing system with a unique conversation-prompting hardware to make credit cards access easy.
Cash App has amassed more than a whopping $17 billion with more than 600 employees in all these years.
Although, initially it seemed that Square became popular due to celebrity stature of Jack Dorsey, but it is not so.
A deeper insight shows the sustainable model and increasing potential of the platform with its eye-catching design.
The catchy hardware inflicts a lot of interest to anyone who views it once.
How Cash App Deals with Credit Cards so Easy?
Dealing with credit cards is not at all a joke and is a real pain to do so.
However, Cash App has a unique model and through that, it deals with the access of credit cards.
1. When you are ready for a purchase, the seller enters the transaction into Square POS or point of Sale.
Then you can view the amount you owe to the seller.
2. Now, you can pay the amount by swiping your Debit/Credit card.
You can also do that by simply tapping your NFC enabled smartphones on the Square Stand.
As soon as you tap it, Square Stand accesses all your account information for the payment.
3. Next, Square POStransfers your transaction data to Square, which eventually plays the role of PSP or Payment service provider.
4. Finally, Square transfers all the payment data to the Acquiring processor via online.
For each transaction, Square has to pay a nominal fixed fee to the Processor.
P2P Payments from Cash App
Going by the name of Cash App, the P2P payments app from Square has now 7 million active users.
The US Fintech industry is currently ruled by payment processing companies such as PayPal Inc., Venmo LLC, and Cash App.
However, due to the popularity of these payment platforms, many other competitive companies have also shown up.
Facebook, Alphabet, Apple Inc., Amazon etc. are some of the other mobile payments services ruling the market.
These P2P services helps in paying bills, transacting money, buying goods, and a lot more through just a smartphone app.
The introduction of these P2P payments systems has brought in a revolution to the business world.
The main objective of these systems are to reduce transaction fees for business and making transaction faster.
Simultaneously, it also makes payment processing much social and efficient for businesses of all kinds.
Apparently, it means that you can now receive or send money to your friends totally free.
On the other hand, if you forgot your wallet at home and need to buy a coke, you can do it from your phone.
It was never this simple and it truly can do wonders to businesses when it comes to transacting money.
Why Cash App Is Needed?
Similar to that of other revolutionary companies, Cash App also emerged by addressing a global need.
Cash App has completely revolutionized payment processes for small as well as large business with a greater convenience.
Prior to Cash App, non-registered sellers could not access credit cards payments.
At one hand, it was completely illegal for them to do so.
On the other hand, small business owners could not afford the high registering fees.
Thus, they had to really suffer when it came to payment processing.
Most customers would carry plastic cards rather than cash and hence, they ended up with loss.
Moreover, the complex process and high registering fees of credit cards seemed impractical to them.
They couldn’t afford it and hence, couldn’t sell products at most times.
Jim McKelvey had to suffer a loss of $2000 once at an art fair simply because he couldn’t accept credit cards.
Be it a local hot dog seller, college fundraising, or election campaign, there was no way of accepting credit cards.
These people had to solely rely on liquid cash holders that eventually set a limit on their cash sources.
With Cash App, everything becomes super easy and you can accept credit cards anytime.
It led to potential growth of small businesses and fundraisers globally.
Initial Traction of Cash App
Public information regarding the initial traction or stage of Cash App is not available so much.
However, Jack Dorsey created a title called ‘140 reasons Why Cash App will Fail’ and posted in on his twitter.
He sent this to all the potential investors by countering every objection or scenario.
He tried to show his investors that he is ready for any possible negative outcome and prepared to fight it.
This was also a wise trick to gather more attention on Cash App.
Although, Jack Dorsey’s celebrity stature helped amass prior investor and press attention, but Cash App was for something else.
He made Cash App for average small business owners to access credit cards but not the avid, Tech reader.
Organizing events, Dorsey also demonstrated potential vendors and investors to show how easy it was using Cash App.
Following Market Leaders and Collaborating
Following the footprints of unique combined hardware and software solution such as Apple iTunes or iPod, he made Square.
Cash App is easy in using, has an elegant design and is unique to other solutions on the market.
Spreading word of mouth in reimagining credit cards acceptance, Cash App unlocked potential market for more customers.
Initially, there was concern among people with its security and it faced hurdles.
However, with time, it gained momentum and credibility among users.
Cash App held the hands of industry leaders to build credibility and users reviews made it rise high.
Through partnerships with Apple and investments from Visa, Square showed their seriousness and that their product is apparently credible.
This led Cash App get the credibility required for being a must have solution to business from a side hustle.
Apparently the four major factors that drove popularity of Square are:
- Remarkable hardware and software combination with elegant design similar to iTunes.
- Making credit cards processing easy for long hungry small business owners without hefty prices.
- Dorsey’s initial promotion and awareness through his public profile.
- Strategic investments and partnership with leaders that built credibility and distribution.
How Cash App Works?
Cash App as stated above is a mobile payment processing company and does everything online.
Cash App works with both individual users and businesses through its own app.
You can get the app on Android, iOS and even your own favorite browser, thus making it convenient to use.
Once you add your debit card or credit card to the app, you can now send or receive money anywhere.
Whether you are a small business owner or an individual, you can use Cash App easily anywhere from your phone.
The major difference of Cash App with other solutions is that it transfers the money directly from the user’s account.
Cash App does not keep the cash with the payment service provider and itself acts as PSP.
When you send money through PayPal to an account, it stays there in the recipient’s account unless they withdraw.
Cash App does the opposite.
It directly sends the money to the recipient’s linked Cash App account.
The entire process happens to be completed instantly according to Cash App.
However, depending on your bank schedule, it may take one or couple business days to reach.
Nevertheless, Cash App works with debit card accounts, but not credit card or bank accounts directly.
How Cash App Makes Money?
The main selling point of Cash App is that it is completely free to use for individuals.
However, after checking its fee schedule, you can apparently see that their claim is true.
Cash App makes money by charging a small fee to businesses for the services it offers.
Although, individuals will have to bear a small 1% fee if you want to expedite your deposit services.
Now, because Cash App is a part of Square, it is not possible exactly to tell how much money it generates for Square.
Cash App generated approximately $1billion for Square in 2015 as per Square’s SEC filings.
On the contrary, it amassed a whopping $17.9 billion in the Q4 of 2017, which is a drastic and chump change in terms of revenue.
This clearly indicates the massive popularity and increase in user base Cash App generated.
Cash App charges 2.75% for every transaction swiped and 3.75% + 15 cents when you manually enter transaction.
Recently, Cash App has introduced its very own Cash card or debit cards that helps you transact online.
You can use this card to buy anything online using the funds you store in your Cash App account.
This is apparently to make people use the received money instantly rather than waiting for it to clear to their bank account.
Jack Dorsey stated that this card helped people especially who does not have a bank account.
Cash App also offers several additional solutions to other businesses at different prices.
It sells a loyalty program, email marketing, analysis and payroll services to name a few among the others.
Cash App helps you transacting money into 25 different countries worldwide and is expanding more.
However, it is not clear whether they charge any additional fees for foreign currency payments.
Guess you have to use Cash App to confirm it.
One thing is important and that is, fees can change depending on the company’s policy and updates.
The best way to confirm it is using their services or visiting the company’s personal website.
Cash App’s Growth Engine Today
With the maturity in the company’s growth, their growth engine has also evolved.
You just can’t turn into a billionaire company worth more than $18 billion so easy.
Shifting away from the early traction methods, Square now implies a more matured and conventional marketing trend.
Their unique hardware-software integrated system and the convenience to use is driving Square’s growth faster.
Their consistent innovation in making payments easier and hassle free is what makes them unique.
Be it small business or individual users, Square is convenient for all to use and comes at nominal cost.
The easy to use platform and cheap prices have made fans advocate for the company.
The company’s key strength is in evolving with modern solutions and offering hassle free payment solutions to all.
Cash App has evolved as a pioneer in P2P payment system and is an integral segment of Square.
Currently, Square is doing a massive business of more than $17 billion on quarterly basis.
It is expected that the figures will skyrocket much higher and should go way beyond by the next year.
As long as it is continuing offering free transacting services to individuals, it is expect to see a massive growth.
However, since it is linked to Square’s overall earnings, it is hard to tell how much Cash App alone is making.
Square reported a net revenue generation of $616 million in the Quarter 4 of 2017.
However, its adjusted revenue amounts to $283 million as per 2017.
Nevertheless, it is of importance to note down that Square is still operating at a loss of $16 million approx.
Regardless, Cash App is absolutely helpful when it comes to online payment processing.
It is especially helpful for small business owners who have been sitting hungry for a solution to accept credit cards.
Square with its massive popularity and ever growing business is soon expected to be a role banking figure on the market.
With each passing day, more and more numbers of small business owners are delving into this platform for its convenience.
If you own a small business or even an individual, checking out Cash App is a good option to go.
Square has also now dabbled into business loans and as per reports, it surpassed $1 billion over the last year.
It reported offered some users the option to trade bitcoins the last year as a sign of entering into cryptocurrency.