How Does Cash App Make Money?

Cash App is a mobile payment service developed by the leading financial technology company Square. Originally launched as Square Cash in 2013, Cash App allows users to transfer money to each other using an app. They can also use their smartphones to pay for goods and services or purchase Bitcoin cryptocurrency. Cash App is free to download and use for the average consumer who wants to send or receive money. Money is instead made through transaction fees for additional products, service fees, hardware fees, interest, and Bitcoin fees.

Business Model Element	Analysis	Implications	Examples
Mobile Payment Platform	– Cash App serves as a mobile payment platform that allows users to send, receive, and manage money using their smartphones. – Users can link their bank accounts or debit cards to the app for seamless transactions. – Cash App provides features like peer-to-peer money transfers, Bitcoin trading, and a Cash Card for physical purchases.	– Offers users a convenient and cashless way to handle financial transactions. – Attracts users looking for quick and easy peer-to-peer payments and cryptocurrency trading. – Provides a financial ecosystem within a mobile app, fostering user engagement.	Users can use Cash App to send money to friends, pay for goods and services, and invest in cryptocurrencies like Bitcoin.
Cash Card	– Cash App issues a physical debit card, known as the Cash Card, that is linked to users’ Cash App balances. – The Cash Card can be used for in-store and online purchases, and it offers customizable designs.	– Expands Cash App’s usability beyond digital payments, making it more versatile. – Encourages users to keep funds in their Cash App account, driving user retention. – Enhances user engagement through the physical representation of their account.	Users can request a Cash Card, which is linked to their Cash App balance, and use it for everyday purchases at retail stores or online.
Bitcoin Trading	– Cash App allows users to buy, sell, and hold Bitcoin within the app. – Users can invest in Bitcoin with as little as $1. – It offers a simple and user-friendly interface for cryptocurrency transactions.	– Diversifies Cash App’s offerings and attracts users interested in cryptocurrency investments. – Provides accessibility to Bitcoin investments for novice investors. – Drives engagement and transactions within the app.	Users can use Cash App to buy, sell, and hold Bitcoin, making it an accessible platform for cryptocurrency investments.
Cash App for Business	– Cash App offers a separate solution for businesses, allowing them to accept payments and manage finances. – Businesses can receive payments via the app, track sales, and access analytics.	– Expands Cash App’s user base to include small businesses and entrepreneurs. – Provides tools for businesses to streamline payment processing and financial management. – Creates a revenue stream by charging businesses processing fees.	Small businesses and entrepreneurs can use Cash App for Business to accept payments, manage finances, and gain insights into their sales and transactions.
Cash Boost	– Cash Boost is a rewards program within Cash App that offers discounts at select retailers when users make purchases using their Cash Card. – Users can choose from various Boosts, which provide discounts at popular stores and restaurants.	– Encourages users to link their Cash Card to the app and use it for payments. – Creates a sense of exclusivity and value for Cash App users through discounts. – Fosters partnerships with retailers to offer unique deals.	When users select a Cash Boost before making a purchase, they receive a discount on their transaction at the participating retailer.
Peer-to-Peer Payments	– Cash App enables users to send money to friends, family, or acquaintances quickly and easily. – Payments can be made by entering a recipient’s username or scanning their unique QR code.	– Promotes hassle-free and instantaneous money transfers among users. – Facilitates social payments and encourages users to refer others to the platform. – Enhances user engagement through peer-to-peer interactions.	Users can send money to others within the Cash App ecosystem by entering a recipient’s username or scanning their QR code.
Value Proposition	– Cash App’s value proposition centers on providing users with a convenient, versatile, and user-friendly mobile payment platform. – It offers features like the Cash Card, Bitcoin trading, Cash Boosts, and peer-to-peer payments.	– Attracts users seeking an all-in-one financial app for managing money, making payments, and exploring investment opportunities. – Encourages user retention through its comprehensive range of services. – Drives engagement by offering exclusive discounts and rewards.	Cash App appeals to individuals looking for a digital financial tool that combines payment convenience, financial management, and investment options in a single app.
Customer Segments	– Cash App’s customer segments include individuals, small businesses, and anyone looking for a digital payment and financial management solution. – It targets both tech-savvy users and those new to mobile payment apps.	– Broadens its user base by catering to a wide range of users, from individual consumers to small enterprises. – Attracts users seeking simplicity in financial transactions and cryptocurrency investments. – Appeals to a diverse audience of varying tech expertise.	Cash App caters to consumers looking for an efficient mobile payment solution and small businesses seeking accessible payment processing and financial management tools.
Distribution Strategy	– Cash App leverages app stores (iOS and Android) to make its app readily available for download. – It also promotes its services through partnerships with online retailers and marketing efforts.	– Enhances user acquisition by ensuring the app is accessible and easy to download. – Expands its reach by partnering with online retailers and tapping into their customer base. – Increases visibility through marketing and promotional activities.	Users can easily install the Cash App from app stores or learn about it through partnerships with online retailers and marketing campaigns.
Marketing Strategy	– Cash App employs various marketing tactics, including online advertising, social media campaigns, influencer partnerships, and referral programs, to raise awareness and acquire new users. – It also promotes its Cash Card and Cash Boosts as unique selling points.	– Builds brand recognition and attracts a larger user base through targeted marketing efforts. – Utilizes user-generated content and social media engagement to foster community and trust. – Collaborates with influencers to reach a wider audience of potential users.	Cash App’s marketing strategy leverages digital advertising, social media engagement, influencer partnerships, and referral programs to engage with its target audience and promote its unique features.
Competitive Advantage	– Cash App’s competitive advantage lies in its user-friendly tools for handling financial transactions and investments. – It differentiates itself with the Cash Card, Bitcoin trading, Cash Boosts, and peer-to-peer payments. – Strong brand recognition and a growing user community enhance its competitive position.	– Positions Cash App as a leading player in the mobile payment and digital financial management space. – Encourages user loyalty and retention through its unique services. – Fosters relationships with partner retailers to provide exclusive deals and promotions. – Gains a competitive edge through its reputation and user trust.	Cash App’s competitive advantage includes its user-focused features, diverse offerings, strong brand presence, and a loyal user base in the mobile payment and financial management industry.

Table of Contents

History of Cash App

Cash App is a mobile payment service developed by the leading financial technology company Square.

Originally launched as Square Cash in 2013, Cash App allows users to transfer money to each other using an app. They can also use their smartphones to pay for goods and services or purchase Bitcoin cryptocurrency.

In late 2020, Cash App was worth $40 billion to Square alone despite strong competition in the P2P payment industry from Venmo, Apple Pay, and Google Pay. The popularity of Cash App has been fuelled by pandemic-related stimulus checks and frequent references to the service in hip-hop music.

The service also actively targets consumers who bank with traditional institutions. Through a weekly giveaway called Cash App Friday, the company entices new sign-ups by distributing cash to current users who enter a draw via Instagram or Twitter.

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Cash App revenue generation

Cash App is free to download and use for the average consumer who simply wants to send or receive money. This freemium model is essentially a way to advertise paid Cash App services by creating trust between the brand and the consumer.

Money is instead made through transaction fees for additional products, service fees, hardware fees, interest, and Bitcoin fees.

Let’s take a closer look at these below.

Transaction, subscription, and service fees

The vast majority of Cash App revenue comes from transaction fees for various subscriptions and services

Fees are levied in a range of scenarios, including:

Instant deposits – for those wishing to instantly deposit funds from the app to a linked debit card, Square charges a 1.5% fee with a minimum charge of 25 cents. Standard deposits which take 1-3 business days are free.
ATM withdrawals – customers are charged a $2 fee for all ATM withdrawals if they do not have a direct deposit set up.
Credit card payments – when a user makes a payment using a linked credit card, Square will charge a further 3% to the transaction.
Bitcoin – to buy or sell Bitcoin on Cash App, a service fee of up to 1.76% based on market activity will be charged. An additional fee is also applicable based on price volatility across U.S. Bitcoin exchanges. This fee is typically in the range of 1-4%.

Hardware fees

If a business wants to accept Cash App as a form of payment, it must pay a 2.75% transaction fee to use the point-of-sale system Square Terminal.

This hardware fee is applicable for in-app consumer purchases and also in circumstances where a purchase is made outside the app with a linked Visa debit card.

Net interest margin

Cash App also makes money by lending the funds in user accounts to other institutions and collecting interest payments. This is known as the net interest margin.

Key takeaways:

Cash App is a mobile payment service developed by fintech company Square in 2013. The app is worth more than $40 billion to the parent organization.
Cash App operates on a freemium model for individuals who want to send or receive money. Instead, most revenue is derived from instant deposit fees, credit card payments, ATM withdrawal fees, and Bitcoin exchange fees.
Cash App also charges businesses a 2.75% transaction fee if they want to accept the app as a form of payment.

Key Highlights

Introduction and Development: Cash App is a mobile payment service developed by Square, a leading financial technology company. It was originally launched as Square Cash in 2013. The app enables users to transfer money to each other, pay for goods and services, and purchase Bitcoin cryptocurrency using their smartphones.
Competition and Growth: Despite competition from platforms like Venmo, Apple Pay, and Google Pay, Cash App gained significant popularity and was valued at $40 billion for Square in 2020. It has been widely used, particularly during the pandemic, and has garnered attention from hip-hop music references.
User Engagement and Acquisition: Cash App actively engages users and attracts new sign-ups through initiatives like Cash App Friday, a weekly giveaway that encourages participation through Instagram and Twitter.
Revenue Generation: Cash App follows a freemium model, offering basic services for free and monetizing through various fees and services.
Transaction Fees: Cash App generates a significant portion of its revenue through transaction fees. These fees apply to services such as instant deposits (with a 1.5% fee), ATM withdrawals ($2 fee without direct deposit), credit card payments (3% fee), and Bitcoin transactions (up to 1.76% service fee).
Hardware Fees: Businesses that want to accept Cash App as a form of payment are charged a 2.75% transaction fee when using Square Terminal, the point-of-sale system. This fee applies to both in-app consumer purchases and purchases made outside the app using a linked Visa debit card.
Net Interest Margin: Cash App also generates revenue by lending user account funds to other institutions and collecting interest payments. This is referred to as the net interest margin.