https://www.cnbc.com/2018/05/18/square-stumbles-into-the-banking-business.html
Square customers are treating the
payment company's Cash app more like a bank account than the company intended,
CEO Jack Dorsey said this week. While that wasn't a goal, he said Square plans
to capitalize on the trend.
"People are using this as
their primary banking account, and in some case it's their only bank
account," Dorsey said on stage at the Consensus blockchain conference in
New York this week. "We are reaching an audience that is under-served and
even to the point of unbanked, which wasn't a stated goal but it's something we
love and want to lean into more."
The company had 7 million active
customers on its money-transfer app in December alone, Square said in its
recent quarterly letter to shareholders.
The Cash app, which launched in
2015, is growing faster than PayPal's Venmo, according to Nomura Instinet. Since
early 2016, Square Cash app downloads have averaged 128 percent year-over-year
growth each month versus Venmo's 74 percent growth, according to the Nomura
analysis.
"The number one and two
merchants we see in the Cash app are Walmart and McDonalds," said Dorsey,
who is also the CEO of Twitter. "This is everyday usage."
Nomura analyst Dan Dolev told
CNBC the banking opportunity is "huge" for Square, and that likely
isn't priced to the stock.
"Square could become a
one-stop shop," Dolev said. "Think about a world where you have a
Square bank account but also it's the merchant, so you're basically you're able
to get around a lot of the fees the banking industry is currently
charging."
The fin-tech company signaled its
plans to break into banking last year.
Square filed for an FDIC licence
to be an industrial loan company in Utah, American Banker first reported in September.
The license would allow it to perform some of the same services as banks,
including issuing loans without having rely on a bank to originate them, and
without having to get licenses in each state.
Square launched cryptocurrency
trading through its Cash app in January, which Dolev said is another main
reason the app has grown in popularity.
Dorsey said on the conference
panel Wednesday he's a "huge fan" of bitcoin and its underlying
technology. Dorsey also said he wants Square to help its long-term adoption.
"The internet is going to
have a native currency, so let's not wait for it to happen, let's help it
happen," Dorsey said. "I don't know if it will be bitcoin, but I hope
it will be."
Shares of Square slipped as much
as 3 percent this week after news that PayPal would pay $2.2 billion to buy
iZettle, which provides mobile card readers. The deal could be a threat to
Square, which also sells its payment hardware to small businesses. The stock later
recovered, trading near $55 Friday.