The rise of technology has seen many innovations and new inventions over the years. We now have access to thousands of apps, and the ability to contact or connect with millions of people over the world. This has also been huge in the world of mobile banking.
P2P, or peer-to-peer payment services such as Cash App have seen a rise in popularity in the past couple of years. It allows customers to send and receive money from their peers, right from their mobile devices.
Cash App has over 36 million monthly users, so how exactly do they make money? Well, Cash App has instant transfer fees, bitcoin exchange fees, cash by Cash App, business fees, and cash card fees. These streams of revenue allowed Cash App to make $12.3 billion in revenue in 2021.
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How Cash App Makes Money
Cash App is a free-to-download app, made by square. It is intuitive and very easy to use. You simply download the app, come up with a cashtag, link your debit or credit card, and you can instantly send and receive money. Cash App has five methods used for bringing in revenue.
Instant Transaction fees
They offer two methods for transferring money to your bank account. You can wait for 1 to 3 business days to have your money deposited into your bank account, or you can have it instantly transferred to your debit card. Let’s be honest, no one wants to wait for 1 to 3 business days for their hard-earned money.
Instant transfers are the most popular option for cash app users. Cash App charges a 1.5% fee, or a minimum of $0.25, whichever is greater. This means for every transfer a customer makes directly to their card, the Cash App gets a piece of the pie.
Bitcoin Fees
Unless you’ve been living under a rock for the last 5 years, you have heard of bitcoin. It is a digital currency that can be used online without the oversight of central banks or the government. It is extremely popular amongst the younger generation.
Bitcoin is the cash app’s most popular source of revenue. It accounts for a staggering 76% of their revenue, which in 2021 was equal to over $4 billion. Cash App charges a service fee and fees determined by the price fluctuation of bitcoin since the value is never constant. The fee can be somewhere between 1.7% and 3%.
Cash App may buy bitcoin when the value drops from a customer for $5,000 and when the value increases, sell it to a different customer for $5,500. This will give them a $500 profit. They have an algorithm that does all the hard work for them to know when to buy and sell.
Cash Card
Cash App released cash cards back in 2017. It is linked directly to your Cash App and can be used just about anywhere. It continues to grow in popularity but isn’t as big as they would hope just yet.
The only fee associated with the card is an ATM withdrawal fee. Cash App charges $2 per transaction on top of the ATM’s service fee. This means every time you withdraw money from the ATM, the Cash App makes a profit.
Cash by Cash App
It seems like selling your merchandise is the way to go for businesses and celebrities these days. Cash App is no different, with their apparel line Cash. This has been a decent source of income for them.
The store offers merchandise like sweatshirts, t-shirts, jackets, accessories, and much more. The prices range from $20 to $200. This is a relatively new service and we have to wait to see if it grows.
Business Transaction fees
Cash App also works with businesses. Most businesses accept cash Apps as a form of payment, so cash Apps figured they might as well make some profit from this.
If you own a business and you accept Cash Apps as a form of payment, they take 2.75% per transaction. This charge is for the merchant and not for the consumers.
How to use Cash App
Cash App is free to download on either the Play Store or the AppStore. The information needed to create an account includes your full name, date of birth, zip code, and an email address or phone number. You can link to a debit card or bank account later on through the app.
After completing this process, you will have to create a username (cashtag) that allows other users to send and receive money from you. This also gives you the option to receive a free debit card in the mail from Cash App if you so choose.
Using a cash card, you’re able to send and receive money like normal or simply use the debit card wherever it is accepted. The money comes directly from your balance. You can add money directly to this balance by simply using your linked bank account.
Sending and Receiving Money with Cash App
Cash App has a great interface that makes it easy to both send and receive money. Sending money is as simple as looking up someone’s phone number, email, or cashtag. After doing this, you can send the money directly to them. They are notified by text and email of this transaction, and the money shows up instantly in their available balance.
Receiving money is as easy as requesting it from friends and family. You can do this by using their cashtag, email, or phone number. Once they send the money, it is deposited into your balance, and you are notified via text, email, or the app.
You have many options with your Cash App balance. You can transfer it to your bank account, debit card, or use it with your cash card.
Cash Limits
To prevent fraud in their apps, Cash App sets limits on how much you can send and receive in a given period. These limits can be increased, but they will need additional information from you. You’re able to send $250 in a 7-day window and it resets after those 7 days. You can receive up to $1,000 within 3 days.
As mentioned earlier, these limits can be increased by giving additional information to Cash App. This information includes your full name, date of birth, and the last 4 digits of your social security number. Limits are different for everyone, so you will have to contact customer support if you’re not happy with your new limit.
Banking with Cash App
Cash App offers more services besides sending and receiving money. You can deposit your checks directly to the app or even receive your tax refund through the app using their banking service.
Perhaps the best feature offered by Cash App is for direct deposits. You can have direct deposits sent straight to the Cash App, though you need to order a Cash App card to unlock this feature. The biggest perk is that you can get your money up to two days earlier.
While these perks are great, the Cash App is not protected by the Federal Deposit Insurance Corp (FDIC). This insurance gives every customer with a supporting bank up to $250,000 if that company were to go bankrupt or out of business. Since your account isn’t backed by the federal bank, you could lose all your money in the blink of an eye.
Cash App Boost
Cash App boost is a great feature offered by Cash App that allows customers to save money. Using your Cash App card, you get discounts on places like restaurants, coffee, food delivery services, and other merchants. They’re always offering new deals, and the only requirement is to have a cash card.
It’s important to note that certain boosts have a maximum limit. To use this feature, simply go into the app, find the deal you want, and click add boost. Just like that, you could save yourself a lot of money.
It is important to know these popular Cash Apps scams when banking with the app.
Bottom Line
Cash App is a great and secure tool to send and receive money from friends and family. They offer many great features, such as early direct deposit, safe transactions, access to bitcoin, and cash cards.
They will be around for a very long time because they are free to use and efficient. Their business model allows them to continue to be profitable. The demand for a p2p service will continue to rise and cash apps will always be there.
The biggest downside to Cash App is they are not FDIC backed. This should be important to customers that keep a lot of money in their Cash App or that use it as their main resource for transactions.
A more traditional bank that is FDIC insured can protect your money, while Cash App can’t say the same. They have said they are working intensively to get the federal banks to work with them. Only time will tell if a deal can be made between the two parties.
