The Venmo competitor is also adding virtual debit cards
Square Cash, Jack Dorsey’s rival to the popular money-transfer app Venmo, is still a money-loser. It is trying to change that.
Starting today, people who receive a payment via Square Cash can cash out the money to a bank account instantly if they’re willing to pay a 1 percent fee. Previously, some Cash users got instant deposits for free, but Square never promised that speed and couldn’t guarantee it for all users.
Going forward, those who don’t want to pay the fee will see deposits post to their account on the next business day.
The move underscores Square’s desire to turn Square Cash into a moneymaker as the scrutiny of being a public company intensifies. Square Cash’s existing model — charging small businesses 2.75 percent to accept payments from customers via the app — has rarely been discussed on the company’s earning calls and is not a material part of the company’s business.
At the same time, the fee for instant deposits eliminates one of the main benefits that some people saw in using Square over Venmo: Same-day deposits, for some users, for free. But Square seems confident that since Square merchants have shown an interest in paying extra to have access to their funds instantly, so will everyday people. (Maybe! Also, maybe not!)
Square is also introducing virtual payment cards that will allow Cash users to buy things on websites and apps using money in their Square Cash account. Cash users need to enter a card number, just as they would with any other payment card. This is what they look like:
The company is also working to make these virtual cards compatible with Apple Pay and Android Pay, making it possible to use Square Cash funds to tap and pay in stores that accept mobile payments. Dorsey has previously hinted at something like this.
The obvious question is why someone would choose to use a Square Cash account — either in a store or on a website — instead of their regular debit or credit card? A spokesperson cited push notifications triggered by purchases — something that some services like Apple Pay already employ — as well as easy-to-browse digital receipts as potential incentives.