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Cash App

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Cash App
Square Cash app logo.svg
Developer(s)Square, Inc.
Initial releaseOctober 15, 2013 (2013-10-15)
Operating systemAndroid, iOS
Available inEnglish, French
TypeMobile payment
Websitecash.app

Cash App (formerly known as Square Cash) is a mobile payment service developed by Square, Inc. that allows users to transfer money to one another using a mobile phone app. The service is only available in the US and the UK.[1] In September of 2021, the service reported 70 million annual transacting users and has generated $1.8 billion in gross profit.[2]

History

Cash App was launched by Square, Inc. in October 15, 2013 under the name "Square Cash".[3]

In March 2015, Square introduced Square Cash for businesses. This allowed individuals, organizations, and business owners to create a unique username to send and receive money, known as a $cashtag. Since then, the $cashtag has become the most popular method for users to transfer money.[4][5]

In January 2018, Cash App added support for bitcoin trading.[6][7][8]

In October 2019, Cash App added support for stock trading to users in the United States.[9]

In November 2020, Square announced it was acquiring Credit Karma Tax, a free do-it-yourself tax-filing service, for $50 million and would make it a part of its Cash App unit.[10]

On November 3, 2021, Square opened up Cash App to teenagers between the age of 13 and 17. The app previously required its users to be at least 18 years old. Younger teens will require a parent or guardian to authorize their account and will not have access to bitcoin or stock trading until they turn 18.[11]

Services

Banking

The service allows users to send, receive, and store money. Users can transfer money out of Cash App to any local bank account. The Cash Card is a customizable debit card that allows users to spend their money at various retailers and withdraw cash from an ATM.[12][13][14] When signing up for the Cash Card, users can customize it by selecting a color, adding stamps, drawing on it, and even making the card glow in the dark. Once your custom design is finalized, the card is sent to the user through the mail.[15]

As of March 7, 2018, the Cash App supports automated clearing house (ACH) direct deposits.[16][17]

Peer-to-peer money transfer

Users can request and transfer money to other Cash App accounts via phone number, email, or $cashtag.[18] The $cashtag acts as a unique username for the user's account and can only be changed twice.[19][20] When transferring money, users can optionally add a message to be sent to the counterparty.[18]

Unverified accounts may only send $250/week and receive $1,000/month. In order to verify an account, a user must submit their legal name, date of birth, and the last four digits of their social security number. Verification raises the weekly sending limit to $7,500/week and completely removes the receiving limit.[21]

Cryptocurrency

In 2018, the capability to buy and sell bitcoin was added to the app.[22] Users can also send bitcoin to each other using their $cashtag, deposit bitcoin into the app from another source, and withdraw their bitcoin to an external wallet. Unlike other cryptocurrency exchanges, buying and selling bitcoin on Cash App is instant and does not require confirmation on the blockchain. Currently, Cash App only supports bitcoin and has not announced any plans to support other cryptocurrencies in the future.[23] Bitcoin trading is currently not available to minors on Cash App.[11]

Investing

In 2020, the capability to trade stocks was added to the app for US residents only.[24] Users can buy and sell fractional shares of most publicly traded companies with a minimum of $1. Stock trading follows standard market hours of 9:30 am – 4:00 pm EST and can be managed from the app’s investing section. Stock trading is currently not available to minors on Cash App.[11]

Finances

As of November 1, 2021, Square has a market capitalization of $117.4 billion.[25] As of 2020, two-thirds of Square's total valuation ($65 billion in 2020) comes from Cash App.[26] Its largest market competitor is Paypal, which owns Venmo. Other major competitors include Apple Pay, Google Pay, and Zelle.

Business model

Cash App is free to download on the Google Play Store, Apple App Store, and other mobile store platforms. Because the app is initially free, it incentivizes more users to create an account and use its services. If users want additional services other than a standard money transfer, Cash App charges small percentage fees and/or initial fixed costs to generate revenue.[27]

Cash App's primary revenue stream comes from users withdrawing funds from the app to their linked bank accounts. Cash App provides two options to transfer money into a third party bank account; wait 3-5 business days, or instantly withdraw with a 1.5% fee.[28]

If users don’t have a direct deposit account with the app, they will be charged a $2 fee for withdrawing money from an ATM. Cash App also allows users to buy and sell bitcoin from their platform for a small service fee based on the current bitcoin market volatility. Businesses can also accept Cash App as a form of payment and charge a transaction cost of 2.75%.[29]

Similar to banks, Cash App will occasionally loan out money from users' accounts to various institutions. By doing so, they charge interest and create revenue, also known as money creation. In the case of a bank run, Cash App is required to hold 10% of the users' accounts liquidity as part of the fractional-reserve banking.[26]

Safety and protection policies

Cash App uses a combination of encryption and fraud detection technologies to help secure users' data and money. All data is encrypted and sent to Square’s secure servers regardless of the connection type (public and private WiFi and all forms of mobile data). If fraud is detected at any point during a transaction, Cash App will automatically cancel the transaction.[30]

To further increase security, upon signing into an account, a user is sent a one-time use login code by SMS or email.[30]

Cash App includes an option in its settings labeled Security Lock. This provides users an extra step of protection as it requires users to enter their password before completing any transaction.[30]

Fraud and illicit activity

There has been a reported history of scams via Cash App. Common scams include customer support impersonation, fake offers and programs, flipping, and the selling of fake expensive items.[31] Many of these scams are hard to dispute, offering little buyer protection in comparison to services like PayPal.[32]

Since the start of COVID-19 pandemic and the rise in use of payment apps, there has been a notable increase in reported scams.[33] In one instance, a man was scammed out of $24,000 due to customer support impersonation.[34] In another instance, a scammer used the public video of a female Waffle House worker holding a baby in a kitchen to fabricate an emotional story. The scammer used social media to share their Cash App information in hopes of receiving donations from unsuspecting victims that wanted to help out.[35]

Millennials frequently utilize payment platforms like Cash App and Venmo to pay for illegal drugs or gamble.[36] In June 2021, police in West Baltimore arrested seven people for using Cash App as a means to sell cocaine and heroin to nearby neighborhoods.[37]

Cultural impact

In 2018, Cash App surpassed Venmo in total downloads (33.5 million cumulative), becoming one of the most popular peer-to-peer payment platforms available.[38]

Cash App is mentioned by about 200 hip-hop artists in their song lyrics, leading some to assert that it is now "ingrained in hip-hop culture," with its popularity stemming from African American communities in the Atlanta area.[39][40] Some cite the early adoption of cryptocurrencies among members of the rap community as another reason for Cash App's cultural cachet. The popularity of the app in hip-hop is reflected in Square's partnerships with prominent rappers, such as Travis Scott, Megan Thee Stallion, and Cardi B.[40]

Social media influencers frequently use Cash App to request donations from their followers. Every Friday since 2017, Twitter users retweet posts from the official Cash App account with the #SuperCashAppFriday hashtag to potentially win $10,000 to $50,000. These posts often have a notable amount of engagement.[41]

References

  1. ^ Gebel, Meira. "Cash App does not work internationally — here's what you need to know". Business Insider. Retrieved 2021-11-01.
  2. ^ Levy, Adam (2021-09-20). "Don't Look Now: Square's Cash App Is Almost as Big as Venmo". The Motley Fool. Retrieved 2021-11-02.
  3. ^ "How Square's Cash App Makes Money". Investopedia. Retrieved 2021-11-02.
  4. ^ "Square Cash is Open for Business". Square. Retrieved 2018-04-02.
  5. ^ "Square rolls out its Square Cash payment service to businesses". The Verge. Retrieved 2018-04-02.
  6. ^ "Square's Cash App payment application now allows users to buy and sell Bitcoin". Digital Trends. 2018-02-01. Retrieved 2018-04-02.
  7. ^ "Square Cash app now lets you easily buy and sell Bitcoin from iPhone". 9to5Mac. 2018-01-31. Retrieved 2018-04-02.
  8. ^ Kleinman, Jacob. "How to Buy Bitcoin With Square Cash". Lifehacker. Retrieved 2018-04-02.
  9. ^ Peters, Jay (2019-10-24). "Square's Cash App officially adds free stock trading, starting at $1". The Verge. Retrieved 2021-11-03.
  10. ^ Weil, Dan (2020-11-25). "Square to Buy Credit Karma Tax for $50 Million, Expanding Reach". TheStreet. Archived from the original on 2020-12-06. Retrieved 2020-12-20.
  11. ^ a b c "Square's Cash App opens up to teens ages 13 to 17 with parental oversight". TechCrunch. Retrieved 2021-11-04.
  12. ^ "Square's Cash app now supports direct deposits for your paycheck". TechCrunch. Retrieved 2021-11-01.
  13. ^ Kulp, Patrick (2017-06-28). "People are getting creative with Square's customizable cash card designs". Mashable. Retrieved 2021-11-01.
  14. ^ Salinas, Sara (2017-11-16). "Square Cash users can now withdraw money from any ATM with their Cash Cards". CNBC. Retrieved 2021-11-01.
  15. ^ Rey, Jason Del (2017-05-04). "Square is rolling out its first debit card". Vox. Retrieved 2021-11-01.
  16. ^ "Square's Cash app now supports direct deposits for your paycheck". TechCrunch. Retrieved 2021-11-01.
  17. ^ "Official Cash App Tweet About Direct Deposits". Twitter. Retrieved 2021-11-01.
  18. ^ a b John, Steven. "How to send money on Cash App on your iPhone or Android". Business Insider. Retrieved 2021-11-04.
  19. ^ "With $Cashtag, Square seeks to eliminate checks for businesses". Fortune. Retrieved 2021-11-01.
  20. ^ "Square's 'cashtags' turn a custom web link into a tip jar". Engadget. Retrieved 2021-11-01.
  21. ^ "What is Your Cash App Limit and How to Increase It". Wise. 2021-05-28. Retrieved 2021-11-01.
  22. ^ "Square's Cash App payment application now allows users to buy and sell Bitcoin". Digital Trends. 2018-02-01. Retrieved 2018-04-02.
  23. ^ "Square's Cash App". CryptoCurrency Facts. Retrieved 2021-11-01.
  24. ^ "PayPal Is Planning to Offer a Super App with Fintech Services like Crypto, Payments, Investing, Rewards Accessible via Common Interface". Crowdfund Insider. 2021-02-13. Retrieved 2021-11-01.
  25. ^ "Square (SQ) - Market capitalization". companiesmarketcap.com. Retrieved 2021-11-02.
  26. ^ a b "How Square's Cash App Makes Money". Investopedia. Retrieved 2021-11-02.
  27. ^ Taylor (2016-02-11). "Free vs Paid Apps: Pros & Cons". AppInstitute. Retrieved 2021-11-03.
  28. ^ "Cash App Revenue and Usage Statistics (2021)". Business of Apps. 2020-09-02. Retrieved 2021-11-03.
  29. ^ "How Square's Cash App Makes Money". Investopedia. Retrieved 2021-11-03.
  30. ^ a b c "Keep your money and account safe on Cash App". cash.app. Retrieved 2021-11-03.
  31. ^ nelson, Brooke (2021-07-03). "5 Common Cash App Scams and How to Avoid Them". Reader's Digest. Retrieved 2021-11-03.
  32. ^ "How to use PayPal Buyer Protection". CHOICE. 2021-06-03. Retrieved 2021-11-04.
  33. ^ Wilson, Diane (2021-05-25). "Complaints against Cash App skyrocket during COVID-19 pandemic". ABC11 Raleigh-Durham. Retrieved 2021-11-02.
  34. ^ Wilson, Diane (2020-12-11). "Raleigh man loses $24K in Cash App scam | Here's how the scammers fooled him". ABC11 Raleigh-Durham. Retrieved 2021-11-02.
  35. ^ Keane, Isabel (2021-10-08). "Online scammer fabricates backstory on Waffle House worker carrying baby". Metro. Retrieved 2021-11-02.
  36. ^ Morse, Jack (2017-07-11). "Millennials, stop using Venmo to buy drugs". Mashable. Retrieved 2021-11-04.
  37. ^ Davis, Phil. "Seven people charged with running 'CashApp' drug trafficking ring in West Baltimore, police say". baltimoresun.com. Retrieved 2021-11-04.
  38. ^ "How Square's Cash App Makes Money". Investopedia. Retrieved 2021-11-02.
  39. ^ Hale, Kori. "Hip-Hop's Role In Square's $40 Billion Cash App Business Success". Forbes. Retrieved 2021-11-02.
  40. ^ a b Nast, Condé (2021-04-12). "Hip-Hop Loves Cash App, and That Might Be Why Jack Dorsey Bought Tidal". GQ. Retrieved 2021-11-02.
  41. ^ Long, Le Van Tuan (2020-06-02). "How Cash App Grew 60% Each Year With Viral Influencer Marketing". Medium. Retrieved 2021-11-02.

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