Square announced Monday they would allow Cash App users to pay with their account at Square-enabled merchant POS systems.
The move combines the millions of businesses that use the Square checkout devices with 40 million Cash App users. In a first, a major fintech will challenge the payments giants at in-person checkout.
“At Cash App, we are always looking for new ways to enhance our commerce capabilities and meet our customers where they are,” Brian Grassadonia, head of Cash App, said. “The option to checkout online or in-store with Cash App has been a frequent request amongst our customer base.”
Cash App users can use a QR code or tap a button in the app at checkout, Square said. Pay with Cash App will be free for users.
Merchants that already use Square checkout can begin offering the utility soon.
The firm joins Shopify and Paypal in the burgeoning fintech payments race. The new system is unique, creating a closed network outside of the giants that make POS possible. PayPal’s Venmo credit card uses Visa, and Shopify uses all the rest.
Mastercard, Visa, Amex, and Discover can expect more fintechs to focus on directing their massive user bases toward payments processing. Insider broke last week that Amazon is building a team to create a POS system for small businesses.
Why Pay with Cash App rails now?
At the end of 2020, Square realized a problem: Cash App grew at an astonishing rate, but its available products did not. Pay with Cash App is a way to reengage customers that have used Cash App before, but don’t log in monthly.
According to Square’s 2021 Q2 results, the firm saw 40 million monthly customers in June: a considerable number but only about half of the 70-80 million total users that have ever used the app.
To get them back, CFO Amrita Ahuja is following a plan she first discussed in Nov 2020. During the third quarter investors conference, she laid out how they could capitalize on the success of Cash App.
“Frankly, [that growth is] probably too fast in terms of margin progression,” she said. “As we plan for 2021, we again are making the deliberate decision to invest in both ecosystems as we believe we are in the midst of a transformative opportunity to reach new customers and expand each of our ecosystems.”
To bring in new users and keep those that had a taste but weren’t tied down, Ahuja and her team planned on reinvesting up to $850 million in extra operating expenses on products in 2021. She said 60 per cent of the sum would go toward Cash App.
Those funds likely went toward acquiring AfterPay (although the transaction is primarily stock) over the summer.
The other part went toward developing products like Cash App Pay. The firm also hopes to encourage business owners to have a reason to re-download the app. Thirty million business owners have used Square POS, but only two million actively use the system every month.
“I am stunned by how easy and intuitive Cash App Pay is to use for both my staff and customers,” Peter James a Manager of a tea shop in St. Louis said.
“Our customers love the ability to scan a QR code and quickly pay right from their phone, which has simplified and sped up our checkout process. Cash App Pay is also proving to be a great way for us to reach a whole new customer base.”
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