Cash App has become widely popular in a fairly short period of time. Developed by Square Inc., Cash App was originally known as Square Cash when it first launched back in 2013. With thousands of five-star ratings on both Apple App Store and Google Play Store, it’s safe to say that people absolutely love Cash App. Now you may be wondering how does cash app does even make money?
Before we get into how Cash App makes money, let’s talk about why people love Cash App. What is Cash App and what is it even supposed to do?
About Cash App
Cash App a financial services company. With Cash App, people can transfer money to each other instantly at no cost, get a customized virtual as well as physical debit card for free, buy and sell stocks commission-free, receive paychecks up to two days early, and buy, sell, deposit and withdraw bitcoin easily.
Now that’s quite a list of perks that come along with Cash App. For most users, it doesn’t get better than this. What’s not to love about this app?
To give you an estimate about how big the app really is, let’s talk about some data. According to The Motley Fool, Cash App is almost as big as Venmo. 70 million users actively used Cash App in 2020 alone as compared to Venmo’s 75 million. Let that number sink in.
With Cash App offering so many services to millions of its active users for free, how do they even make money?
How Cash App Makes Money
Cash App made a profit of $1.23 billion in 2020.
You can download cash app right away for free. You can set up your account, get your cards, start using them and transfer money for free. You probably would never ever have to pay a dime in fee to Cash App.
While majority of users would never have to pay, some would. Cash App does charge fees. And that’s how they make money.
Bitcoin Fees
Cash App charges a small fee of up to 1.7% when you buy or sell Bitcoin on Cash App. The fee varies and is based on market activity. Depending on the price of Bitcoin on other major exchanges as well as the fluctuations in the price of Bitcoin itself, you may have to pay a higher fee.
When withdrawing Bitcoin on Cash App, you have three different speed options to choose from:
- Standard
- Rush
- Priority
When you select Standard speed, you would not have to pay a network fee. However, if you choose Rush or Priority, you would have to pay a network fee. This fee would be determined by how congested the blockchain is at the time of the transaction.
Instant Deposits
Along with standard deposits, Cash App also offers Instant Deposits. With Instant Deposits, users can instantly deposit funds to a linked debit card from the within app.
While standard deposits are free and show up in 1 to 3 business days, Instant Deposits are not free but they show up instantly.
The fee for Instant Deposits ranges from 0.5% to 1.7%, with a minimum fee of $0.25.
ATM Fees
Any ATM in the world can accept Cash Cards, with a $2 to $2.50 fee levied by Cash App. This is if users have not set up direct deposits.
If you receive qualified direct deposits totaling $300 (or more), Cash App will cover up to $7 in ATM withdrawal fees for up to three transactions over a 31-day period. Any additional withdrawals in the 31-day period will each cost $2.00 and this is another way Cash App makes money.
Credit Card Payments
Users can also make personal payments using a credit card rather than their Cash App balance.
When they pay using their credit card, Cash App charges a 3% fee.
Paper Money Deposits
At participating merchants such as Walmart, 7-Eleven, etc., users can deposit paper money or bank notes to their Cash App balance.
Paper money deposits at participating retailers are subject to a fee of $1 per transaction.
Cash for Business
Business owners can accept payments using a Cash for Business account. There is a 2.5% per transaction fee that businesses have to pay to accept payments.
Additionally, if a business that uses a Cash for Business account accepts credit cards, then they have to pay a fee of 2.75% per transaction.
Is There A Fee To Use Cash App?
For individual users of the Cash App, the majority of services are free. There are additional fees for some services, such as faster withdrawals, however there are also slower free withdrawal options.
Conclusion
People are becoming more and more dependent on digital wallets in a time when smartphones are widely used and consumers are willing to pay for convenience.
There is a fierce and a growing competition in this field. Some rivals to Cash App include Apple Pay and Google Pay, which are pre-installed on iPhone and Android devices, respectively.
The future looks bright for Cash App but it must keep releasing intriguing new features that draw in new users if it wants to continue to dominate the industry.