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Cash App (formerly Square Cash) is a mobile payment service available in the United States and the United Kingdom that allows users to transfer money to one another (for a 1.5% fee for immediate transfer) using a mobile phone app. In September 2021, the service reported 70 million annual transacting users and US$1.8 billion in gross profit.


History

Cash App was launched by Block, Inc. (formerly Square, Inc. at its launch) in October 15, 2013 under the name "Square Cash". 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. In January 2018, Cash App added support for
bitcoin Bitcoin (abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
trading. In October 2019, Cash App added support for stock trading to users in the United States. 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. On November 3, 2021, Square opened Cash App to teenagers between 13 and 17. The app previously required its users to be at least 18 years old. Younger teens will need a parent or guardian to authorize their account and will not have access to cryptocurrency or stock trading until they turn 18.


Services


Banking

The service allows users to send, receive, and store money within the US and the UK (but not internationally). Users can transfer money out of Cash App to a bank account in their country. The Cash Card is a customizable
debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term '' plastic card'' includes the above and as an identity document. These are similar to a credit card, but ...
that allows users to spend their money at various retailers and withdraw cash from an ATM. 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. As of March 7, 2018, the Cash App supports automated clearing house (ACH) direct deposits.


Peer-to-peer money transfer

Users can request money from and transfer to other Cash App accounts via phone number, email, or $cashtag. The $cashtag acts as a unique username for the user's account and can only be changed twice. When transferring money, users can optionally add a message to be sent to the
counterparty A counterparty (sometimes contraparty) is a legal entity, unincorporated entity, or collection of entities to which an exposure of financial risk may exist. The word became widely used in the 1980s, particularly at the time of the Basel I deliberat ...
. 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. Unverified accounts can only send up to $250 per week and receive $1,000 per month. To verify an account, a user must submit their legal name, date of birth, and, in the US, the last four digits of their social security number. Verification raises the weekly sending limit to $7,500 per week and removes the receiving limit.


Cryptocurrency

In 2018, the capability to buy and sell
bitcoin Bitcoin (abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
was added to the app. 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 A wallet is a flat case or pouch often used to carry small personal items such as paper currency, credit cards; identification documents such as driver's license, identification card, club card; photographs, transit pass, business cards and ...
. Unlike other
cryptocurrency exchange A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. Exchanges may acc ...
s, buying and selling bitcoin on Cash App is instant and does not require confirmation on the
blockchain A blockchain is a type of distributed ledger technology (DLT) that consists of growing lists of records, called ''blocks'', that are securely linked together using cryptography. Each block contains a cryptographic hash of the previous block, ...
. Cash App only supports bitcoin and has not announced any plans to support other cryptocurrencies in the future. Bitcoin trading is not available to minors on Cash App.


Investing

In 2020, the capability to trade stocks was added to the app for US residents only. 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 not available to minors on Cash App.


Finances

As of November 1, 2021, Square had a market capitalization of $117.4 billion. 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 initial fixed costs to generate
revenue In accounting, revenue is the total amount of income generated by the sale of goods and services related to the primary operations of the business. Commercial revenue may also be referred to as sales or as turnover. Some companies receive rev ...
. 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. 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%. Like banks, Cash App can lend money deposited by users to various institutions, charging interest and thus generating revenue, known as
money creation Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region,Such as the Eurozone or ECCAS is increased. In most modern economies, money creation is controlled by the central bank ...
. Cash App is required to hold 10% of users' accounts liquidity as part of the
fractional-reserve banking Fractional-reserve banking is the system of banking operating in almost all countries worldwide, under which banks that take deposits from the public are required to hold a proportion of their deposit liabilities in liquid assets as a reserv ...
, to protect depositors in the event of a bank run.


Safety and protection policies

Cash App uses a combination of
encryption In cryptography, encryption is the process of encoding information. This process converts the original representation of the information, known as plaintext, into an alternative form known as ciphertext. Ideally, only authorized parties can d ...
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. To further increase security, upon signing into an account, a user is sent a one-time use login code by
SMS Short Message/Messaging Service, commonly abbreviated as SMS, is a text messaging service component of most telephone, Internet and mobile device systems. It uses standardized communication protocols that let mobile devices exchange short text ...
or email. Cash App includes an option in its settings labeled Security Lock. This provides users an extra protection step as it requires them to enter their password before completing any transaction.


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, and the selling of fake expensive items. There is little buyer protection, making these scams hard to dispute unlike payment services such as PayPal. Since the start of the
COVID-19 pandemic The COVID-19 pandemic, also known as the coronavirus pandemic, is an ongoing global pandemic of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2). The novel virus was first identi ...
and the rise in use of payment apps, there has been a notable increase in reported scams. In one instance, a man was scammed out of $24,000 due to customer support impersonation. 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 who wanted to help out. Millennials frequently utilize payment platforms like Cash App and Venmo to pay for illegal drugs or gamble. In June 2021, police in
West Baltimore West Baltimore station is a regional rail station located in the western part of the City of Baltimore, Maryland along the Northeast Corridor. It is served by MARC Penn Line trains. The station is positioned on an elevated grade above and betw ...
arrested seven people for using Cash App to sell
cocaine Cocaine (from , from , ultimately from Quechua: ''kúka'') is a central nervous system (CNS) stimulant mainly used recreationally for its euphoric effects. It is primarily obtained from the leaves of two Coca species native to South Am ...
and
heroin Heroin, also known as diacetylmorphine and diamorphine among other names, is a potent opioid mainly used as a recreational drug for its euphoric effects. Medical grade diamorphine is used as a pure hydrochloride salt. Various white and bro ...
to nearby neighborhoods.


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. 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 the Black community in Atlanta. 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. Social media influencers frequently use Cash App to request donations from their followers. Every Friday since 2017,
Twitter Twitter is an online social media and social networking service owned and operated by American company Twitter, Inc., on which users post and interact with 280-character-long messages known as "tweets". Registered users can post, like, and ...
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.


References


External links

* {{Mobile payments Block, Inc. Online payments Mobile payments 2013 software