How Square’s Cash App Makes Money (SQ)

As a part of its growing clout in the financial technology, or fintech, industry, Square Inc. (NYSE: SQ) launched a peer-to-peer (P2P) payment service in 2013 called Cash App. P2P payment apps allow consumers to pay for goods and services, pay bills, and transfer money to friends and family, all from the convenience of their smartphones.

Cash App is free for individuals to download and use to send, request, or receive money, which leaves many people wondering how Square makes money from it. The answer: through fees for businesses that use the app, as well as small fees for individuals who opt to use its expanded services.

A Look at Cash App’s Fees
Square makes money from Cash App by charging businesses transaction fees for using its software. The company charges 2.75% per transaction to businesses that accept Cash App payments.

Square also makes money through individuals who use the app. Although individuals can use the Cash App for free to transfer money to friends or businesses, they have the choice of using its expanded features for additional fees.

For a 1.5% transaction fee, individual users can expedite deposits to have them transferred immediately into their bank accounts instead of waiting the standard deposit time. They can also send personal payments from credit cards for a 3% transaction fee.

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