Cash App Money Transfer Service Propels Square’s Growth

Cash App, the peer-to-peer mobile money transfer service owned by Square, has been a primary driver of Square’s growth this year. The app is responsible for approximately 70% of Square’s revenue in the third quarter of 2020. The lockdowns and increased unemployment brought about by the pandemic is partially responsible for the surge in the popularity of digital wallet apps.

What Cash App Does

Cash App enables users to instantaneously send and receive money as well as save and invest on its platform. Once users create a free account, they pick a unique username called a “$cashtag”. By linking an existing bank account to their account, users can seamlessly transfer funds between the two accounts.

Major Driver of Growth for Square

Revenues stemming from Cash App’s bitcoin trading business have been a major driver of growth for the company. In the third quarter of 2020, the app generated more than $1.63 billion in bitcoin revenue. This represents an increase of more than 1,000% over the same period last year. Cash App’s total revenue in Q3 was $2.07 billion. This means that the revenue generated from the app’s bitcoin segment accounted for 80% of the app’s total revenue figure.

Cash App Square
Cash App Square

Cash App Distinguished from Other Mobile Payment Platforms

The key feature that distinguishes the Square-owned mobile payments platform from similar online payments platforms is the Cash Card. The Cash Card is a free debit card that connects directly to the app’s balance. Certified by Visa, it can be used both online and at brick-and-mortar retail locations. It is also compatible with Apple Pay and Google Pay.

Square’s Stock Price Rising

Square Inc., the digital payments processing company Jack Dorsey founded in 2009, has seen its stock price surge over 180% in 2020 alone. Square currently has a market capitalization of approximately $86 million. Cash App, with an estimated valuation well over $40 billion, represents a sizable portion of Square’s total valuation. Square’s co-founder and CEO, Jack Dorsey is also the co-founder and CEO of Twitter.

Hip Hop Artists and Influencers for Cash App

In addition to pandemic factors, hip hop artists and influencers have fueled the rapid growth of Cash App. By using the platform to engage with fans, rappers have interestingly played a pivotal role in growing the number of monthly active users and building a loyal userbase. According to music database Genius, the app has been mentioned in the rap lyrics of about 200 hip hop artists. In January 2020, Cardi B and Megan Thee Stallion teamed up with Cash App to give away a total of $1 million to 2,000 random selected Twitter users that tweeted a specific hashtag. Such actions have helped the money transfer app engage with a broader userbase.

Cash App Cardi B
Cash App Cardi B

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.