Square’s Cash App
Square (SQ) has been expanding in the P2P (peer-to-peer) payment space with its mobile payment service, Cash App. Square’s user base stood at 15 million at the end of 2018, which is double its 2017 user base of 7 million active accounts. Square has made progress in monetizing those users, allowing them to open Visa debit cards linked to their Cash App balance. Square’s Cash Card, the prepaid debit card connected to Cash App, was the biggest contributor to Square’s subscription and services revenue in last year’s fourth quarter.
Square has made several efforts to boost its Cash App user base. Initiatives such as opening bitcoin trading for its Cash App users, adding automated clearing house direct deposits for paychecks, and offering cash back for using Cash Card have made Cash App very popular and convenient among users.
Competition in the P2P payment space
Square’s Cash App faces competition from PayPal’s Venmo, which allows people to access their balance through a debit card and make mobile money transfers. PayPal started monetizing Venmo’s user base last year. As a result, Venmo reached a $200 million revenue run rate at the end of 2018, and its volumes rose 55% YoY (year-over-year) to $19 billion in the fourth quarter. Last year, Square’s revenue rose 49% YoY to $3.3 billion, and PayPal’s rose 18% YoY to $15.45 billion. Apple Pay Cash, Facebook (FB) Messenger, and Amazon Pay (AMZN) are other leading P2P payment service providers.