Square, one of the first startups that drew the tech world’s attention to mobile payments, announced Monday that it is expanding its money transfer service available for businesses everywhere in the U.S. It’s dubbed Square Cash.The company is going to compete against such giant rivals as Facebook and Google, which seem to be asleep but in fact they are not.
So, about a week ago, Facebook announced the launch of a new payment feature which lets users connect their Visa or Mastercard debit card and tap a “$” button to send friends money on iOS, Android, and desktop with zero fees. Previously, similar tools were created by Google, Amazon and Venmo.
As for costs, Mashable reads that “the fee to businesses for the new payments feature is lower than Square’s fee for its credit card processing system, which demands 2.75% per transaction. Stripe, a rival mobile payment processor, charges 2.9% for each transfer plus $0.30 per successful charge.”
Square states that it is now processing about $1 billion in peer-to-peer payments per year. Obviously, the company needs to ramp that up before other big companies start making some threatening moves.
“Peer to peer payments are typically a loss leader,” Rick Oglesby, a senior analyst for Double Diamond Payments Research, says. “Consumers are just not accustomed to paying a fee in order to send money to someone, but there is a cost so most companies do it for free as a loss-leader for something else.”
The Square’s brand-new service will make possible for companies to receive payments from customers for “an aggressive and affordable professional rate of only 1.5%” per transaction. Consumers won’t be charged for the transactions. It’s also worth saying that the payments will be directly deposited into bank accounts(as opposed to a holding account).
Introduced in 2013, Square Cash previously allowed users to send cash payments to their phone or email contacts. Now, thanks to a new feature called $Cashtags, which is customized and can be shared, firms are able to ask for payments and donations. Apparently, the feature was inspired byTwitter, which was co-created by Square CEO Jack Dorsey.
The company’s announcement states that $Cashtags is a unique identifier allowing anybody to make a personalized name and get paid privately and securely through Square Cash. In addition, Square claims that lots of artists, musicians, social media and America’s leading non-profits use their $Cashtags.
For example, Curtis Kulig, a New York City artist known for his iconic ‘Love Me’ campaign, uses $LoveMe to fund new public art projects. According to the company, Wikipedia ($Wikipedia), The USO ($USO), The Bay Area’s KQED ($KQED), Khan Academy ($KhanAcademy), and others already use $Cashtags for fundraising.