Square stocks rebounded 28% last month and 166% year-to-date, while banking stocks have fallen sharply. This rise is mainly due to the popularity of cash app offers, which allow consumers to send money to each other through a smartphone, buy things with a prepaid debit card, and invest in Bitcoin.
Generally speaking, Square is one of the main payment processors that is endeavoring to turn into the go-to online banking platform for educated customers. It is doing this by working on its advanced digital wallet platform
From the beginning, Square has offered payment processing services to small scales merchants. It started with a POS device, which gives the opportunity to small business owners like massage therapist, taxi drivers, Groceries and others to receive credit card payments.
Furthermore, Square has leverage that accomplishment by offering a versatile application that takes its payment processing abilities to the next level.
This business developed quickly for a long time and later slowed down.
The Covid19 has caused Square a serious lull, as Square’s payment volumes dropped this previous quarter. One can understand this easily since many small businesses have temporarily closed due to the pandemic. Luckily for investors, Square has a plan B, which is different from the payments processing business. The accomplishment of Square’s Cash App has compensated for that danger and that’s only the tip of the iceberg.
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How is Cash app boosting Square inc?
The company has developed a fast-moving online banking service through its application called Cash app.
So, what is cash app?
Cash App is a money transfer app that gives users the possibility to send, save, or receive money in their cash app account. Square keeps on adding more features to make the app stand out on the marketplace. Square’s bitcoin brokerage remains one of the main added features to the app that attract more new users.
Stock analysts at Bernstein Research estimate that investors currently value the Cash app at $ 40 billion, more than half of Square’s total market value. To this rating, the Cash app is valued at more than Capital One Financial Corp. And First Republic Bank, all but nearly ten American banks.
Square has been able to generate huge revenue in the last quarter because of the ability of the users to trade bitcoin on the platform.
You are probably wondering …
How to add bitcoin to a cash app account?
To deposit Bitcoins into your Cash app account:
Click on the Banking tab on the main screen of your Cash app account
Hit Deposit Bitcoin
Scan, copy, or share your Bitcoin address with your Cash app with an external wallet
Confirm with you PIN
Bitcoin deposits process and withdrawals should start. You are allowed to deposit up to $ 10,000 of Bitcoin within 7 days period. The process may take a few hours to complete
The only cryptocurrency accepted on the cash app application is Bitcoin. You may lose your fund when you are trying to add any other cryptocurrency to the cash app account.
Overall, Square offers a lot of additional features. It has a brokerage that allows users to trade stocks and other regulated financial products. Reports indicate that Square will soon launch a direct-to-consumer loan program.
What about the marketplace?
Will Square Be Giving Loans?
The organization has just made a significant move by getting its banking license in March.
After the approval of the FDIC Federal Deposit Insurance Corp, Square inc. is now allowed to launch and operate as a commercial bank. The company will be located in Utah where it will be receiving deposits from its customers and paying interest, which will be insured by the FDIC.
Additionally, the license gives square the opportunity to offer business loans as other commercial banks do. This confirms clearly the possibilities of square starting to offer loans services to the merchants that use its payment platform.
Together, the cash app and the associated banking services are expected to account for half of Square’s total revenue in two years. Yes, there is a lot more here than just the payment processing business.
Collectively, if Square can implement the Cash app and the banking platform, the payoffs will be huge. As such, since there will be a lot of competition it won’t be easy to become the first choice of the consumers in the online banking area.
What About The Competition With The Tech Giants?
In truth, the biggest risk that Square is taking is that its stocks are in competition with giants like PayPal’s stocks, Google pay, Zelle, Venmo, and Apple Pay, and many more.
These are all high-end offerings from large, well-funded competitors, and Square has so far left its mark against these competitors. However, there is no guarantee that it will remain at the forefront of online banking forever.
Other analysts are warning that there are risks that the Cash App will not be able to sustain its current growth. Some recent moves by Square, such as bitcoin trading, have produced returns that are much higher than actual operating profits. In contrast, the assumption is that Square can achieve greater profitability over time as customers become more comfortable with the Cash app.
In case you are thinking of receiving your paycheck through Cash app, make sure you provide the right cash app routing number to your employer.