Cash App is a popular appPeer to peer(P2P) payment service. To make payments, use the contact person's phone number, QR code or email address. You can then send or receive money for free.
Cash App is eigendom van Block, Inc. (SQ) (formerly Square, Inc.), a leader in the financial technology industry. Cash App is just one part of Block's enterprise offering, which also includes software and point-of-sale hardware for businesses of all sizes, as well as cryptocurrency services.
Since going public in November 2015, the company has quickly grown into one of the largest payment processing companies in the US and has expanded its business model beyond payment processing to include business offerings such as scheduling, workforce management and business analytics.
Block (then Square) launched its Cash App service in 2013 to compete with services likeVenmo, Paypal, Apple Pay and Google Pay. Such peer-to-peer (P2P) payment services allow consumers to use their smartphones to pay for goods and services, pay bills and transfer money to friends and family.
Cash App has expanded its functionality to more than just a peer-to-peer payment service; users can also receive direct deposits and ACH payments and purchase cryptocurrency through the platform. Recently, Cash App introduced an investment feature called Investing, which allows users to trade stocks and ETFs commission-free within the application.
In 2018, Cash App surpassed Venmo in downloads with 33.5 million cumulative downloads. As of September 2023, Cash App had 55 million monthly transaction activities. Venmo has approximately 90 million active users.
Key learning points
- Cash App is a peer-to-peer (P2P) payment service owned by Block, Inc., a leader in the financial technology industry.
- Cash App has expanded its functionality to more than just a peer-to-peer payment service; users can also receive direct deposits and ACH payments, as well as purchase Bitcoin cryptocurrency and trade stocks through the platform.
- Cash App makes money by charging transaction fees to businesses and individuals, offering financial services such as cards, and selling Bitcoin to customers.
- The Bitcoin sales segment is the largest revenue generator for the company.
- In 2023, the company had technical issues, causing customers to be charged double fees for card transactions.
- That same month, the Consumer Financial Protection Bureau (CFPB) warned consumers against storing their money long-term in payment apps, citing Cash App as an example.
Cash App Finances
Cash App is free to download and its core features – making peer-to-peer payments and transferring money to a bank account – are also free.
Cash App makes money by collecting transaction fees from businesses and individuals, from subscription services and salesBitcointo the customers.
Different costs are charged to companies and users. For example, instant withdrawals (rather than the typical two- to three-day transfers, which remain free) cost 0.5% to 1.75% of the transferred value. Shipping from a credit card will also incur a 3% surcharge.
Subscription Services include Cash App's financial services-related products, including Cash App Card, Cash App Instant Deposit amounts and related processing fees and charges.
Cash App's Bitcoin segment is its largest revenue generator. In addition to the service fees charged for selling Bitcoin to its customers, there is generally a 1% to 4% difference in what Bitcoin exchanges and individuals pay for Bitcoin. Cash App incorporates these differences into the prices it offers its users, generating additional revenue on the exchanges it facilitates.
Square, Inc. changed its legal name to Block, Inc. in December 2021. It kept the same stock symbol, "SQ". The Square brand will remain connected to the company's Seller business, which provides sellers with an integrated ecosystem of commerce solutions, business software and banking services. The Block brand will focus on the consumer side in an effort to provide financial empowerment to individuals, artists, fans, developers and merchants.
Cash App is a subsidiary of Block, Inc., which reports revenue based on its three business segments: Cash App, Square, and Corporate and Other. Cash App reports revenue in three segments: transactions, subscriptions and services, and Bitcoin.
For the third quarterfinancial year(FY) 2023, for the period ending September 30, 2023, Cash App generated revenue of $3.58 billion; an increase of 33.5%year after year(YYYY). The Cash App segment reported gross profit of $983.86 million; an increase of 27% year/year.
Turnover grew in all segments. Transaction-based revenue grew due to Cash App Business gross payment volume (GPV) growth, primarily driven by peer-to-peer transactions received by business accounts and peer-to-peer payments sent from a credit card. Subscription services revenue grew due to the growth of Cash App's financial services-related products, including Cash App Card usage, Cash App Instant Deposit volumes and interest on customer funds. Bitcoin revenues grew due to the increase in the amount of Bitcoin sold to customers.
Cash App's business segments
Blok reports Cash App's revenue by business segment, but does not break down revenue by business segment. The three reporting segments for Cash App are (1) transaction-based revenue, (2) subscription services revenue, and (3) Bitcoin revenue.
Transactions
Transactions include fees charged for peer-to-peer transactions by businesses and individuals. This segment had revenues of $120.78 million in the third quarter of 2023; an increase of 1.96% from $118.46 million. This segment accounts for 3.37% of Cash App's revenue.
Subscription Services
The Subscription Services segment includes Cash App's financial services products, including Cash App's cards, Instant Deposit amounts and interest earned on customer funds. This segment had revenues of $1.04 billion in the third quarter of 2023; an increase of 29.48% from $803.67 million. This segment accounts for 29.03% of Cash App's revenue.
Bitcoin
The Bitcoin segment generates revenue from the sale of Bitcoin to Cash App customers. This segment had revenues of $2.42 billion in the third quarter of 2023; an increase of 37.49% from $1.76 billion year-over-year. This segment accounts for 67.60% of Cash App's revenue.
The latest development from Cash App
In June 2023, Cash App noticed a technical issue where customers were being charged double fees for certain debit card transactions. The company has resolved the issue and announced refunds to customers.
In the same monthConsumer Financial Protection Bureau(CFPB) issued a statement that consumers should not store their money in payment apps long-term, citing Venmo, PayPal and Cash App as examples. It noted that these accounts may not be secure because they may not be federally insured by the Federal Deposit Insurance Corporation (FDIC).
