Square and Bitcoin: What We Know So Far
Square Cash users can buy and sell bitcoin
US-based (SPY) payments processor Square (SQ) is offering bitcoin trading support on its platform on a trial basis. The trial is specifically for users of the company’s Square Cash app, a peer-to-peer money transfer service.
Square launched the trial bitcoin trading service quietly, but lately, the company’s management has been talking about the trial publicly, although not revealing everything yet. According to a Wall Street Journal report, Square Cash app users can buy and sell bitcoin within the app on their smartphones, indicating that Square’s bitcoin offering tilts toward an exchange-like service. For those trading in bitcoin, Square holds the currency in their Square Cash account the same way it holds cash balances.
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Bitcoin payments and transfers not permitted
While Square supports bitcoin trading among a select group of Square Cash users, the ongoing trial doesn’t support bitcoin-based transactions. In other words, Square Cash users cannot use bitcoin to pay for goods or services within the app. Square also doesn’t allow transfer of bitcoins between Square Cash app users on a peer-to-peer basis.
Square stock jumped on bitcoin report
When reports about Square supporting bitcoin trading started emerging, the stock jumped as investors believed it could open an important revenue opportunity for the company. Analysts at Credit Suisse believe that supporting bitcoin trading could bring Square an additional $30 million in revenue in two years.
Square’s total revenue grew 33% YoY (year-over-year) to $585 million in 3Q17. Square’s rival payments processors PayPal, Fiserv (FISV), and Western Union (WU) reported revenue growth of 21%, 1.0%, and 2.0% YoY, respectively, in 3Q17.