Its primary source of revenue comes from selling Bitcoin to customers.
Cash App is a widely-used peer-to-peer (P2P) payment service. To make payments, you simply need the contact’s phone number, QR code, or email, and you can send or receive money without any charge.
Owned by Block, Inc. (SQ) (formerly known as Square, Inc.), a leader in the financial technology sector, Cash App is just one facet of Block’s diverse business offerings, which also include software, point-of-sale hardware for businesses of all sizes, and cryptocurrency services.
Since going public in November 2015, Block has rapidly grown into one of the largest payment processing companies in the United States, expanding its business model beyond payment processing to include enterprise solutions such as scheduling, employee management, and business analytics.
Block (known as Square at the time) launched Cash App in 2013 to compete with services like Venmo, Paypal, and Apple Pay. These peer-to-peer payment services enable consumers to use their smartphones to pay for goods and services, settle bills, and transfer money to friends and family.
Over time, Cash App has extended its functionality beyond a simple P2P payment service. Users can receive direct deposit payments and ACH payments, as well as purchase cryptocurrency through the platform. Recently, Cash App introduced an investing feature called Investing, which allows users to trade stocks and ETFs commission-free within the app.
In 2018, Cash App surpassed Venmo in downloads, with 33.5 million cumulative downloads. By September 2023, Cash App had reached 55 million monthly transacting activities, while Venmo had about 90 million active users.
KEY TAKEAWAYS
- Cash App is a peer-to-peer (P2P) payment service operated by Block, Inc., a prominent player in the financial technology sector. Beyond its P2P payment capabilities, Cash App allows users to receive direct deposit payments and ACH transfers, as well as purchase Bitcoin and trade stocks on the platform.
- Cash App generates revenue by charging transaction fees to both businesses and individuals, offering financial services such as cards, and selling Bitcoin to its customers. The Bitcoin selling segment is the company’s largest revenue source.
- In 2023, the company experienced technical issues that resulted in clients being double-charged for card transactions. That same month, the Consumer Financial Protection Bureau (CFPB) issued a warning about the risks of storing money long-term in payment apps, citing Cash App as an example.
Financial Overview of Cash App
Downloading Cash App is free, and its primary features, such as making peer-to-peer payments and transferring funds to a bank account, are also free of charge.
Cash App generates revenue through transaction fees charged to businesses and individuals, subscription services, and selling Bitcoin to customers.
Various fees are imposed on businesses and users. For example, instant money withdrawals, which are an alternative to the typical free two- to three-day transfers, cost between 0.5% and 1.75% of the transferred amount. Additionally, sending money from a credit card incurs a 3% fee.
Subscription services encompass Cash App’s financial products, such as the Cash App Card, Cash App Instant Deposit volumes, and associated processing costs and fees.
The Bitcoin segment is Cash App’s largest revenue source. Apart from a service fee for selling Bitcoin to customers, there is typically a 1% to 4% variance between what Bitcoin exchanges and individuals pay for Bitcoin. Cash App incorporates these differences into the prices offered to users, generating additional revenue from the exchanges it facilitates.
❗WARNING: In December 2021, Square, Inc. officially rebranded to Block, Inc., retaining its stock ticker symbol “SQ.” The Square name will continue to represent the company’s Seller business, which offers a comprehensive ecosystem of commerce solutions, business software, and banking services for sellers. Meanwhile, the Block brand will concentrate on the consumer sector, aiming to provide economic empowerment to individuals, artists, fans, developers, and sellers.
Cash App, a subsidiary of Block, Inc., reports its revenues across three business segments: Cash App, Square, and Corporate and Other. Within the Cash App segment, revenue is further categorized into transactions, subscriptions and services, and Bitcoin.
For the third quarter of fiscal year (FY) 2023, ending on September 30, 2023, Cash App generated revenues of $3.58 billion, marking a 33.5% year-over-year (YOY) increase. The Cash App segment reported a gross profit of $983.86 million, reflecting a 27% YOY rise.
Revenue increased across all segments. Transaction-based revenue rose due to an uptick in Cash App Business gross payment volume (GPV), mainly driven by peer-to-peer transactions received by business accounts and peer-to-peer payments sent from credit cards. Subscription services revenue expanded due to the growth of Cash App’s financial service-related products, including increased usage of the Cash App Card, higher volumes of Cash App Instant Deposits, and interest earned on customer funds. Bitcoin revenue grew as a result of selling a larger quantity of Bitcoin to customers.
