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Square’s cryptocurrency-friendly payment app Cash App is reportedly testing a new feature allowing customers to buy and sell stocks. The startup’s employees began testing the new feature in recent weeks.
Internet entrepreneur who is also the co-founder and CEO of Twitter, and the founder and CEO of Square, a mobile payments company Jack Dorsey decided to have his company’s Square Inc. trade Bitcoin on their popular Cash App. Soon, they could include the possibility to buy and sell stocks as well.
According to the company, they are now testing out their Cash App feature which point is to license users to make their free stock trades. And while the exact date of its launch is still not have been announced, employees of the company began trying the new feature in recent weeks.
This is a situation where the free stock trading feature could posture Square as one of the most direct rivals to the fintech startup Robinhood Markets Inc., that, let’s just remind you, earned themselves millions of users only by the decision to offer no-fee trading.
Also, they most recently gathered a valuation of $7.6 billion so this seems to be a big thing. Robinhood has since enlarged into other offerings such as options trading and margin trading, that, as per the sources, would not be offered in Square’s initial product. What actually can happen is that Square’s new service and others like it can be seen as a threat to more established online brokers, like E*Trade Financial Corp.
Devin Ryan, an analyst with JMP Securities said that they are seeing the cadence of free trading increase and that he thinks that’s something the broader industry can’t dismiss.
“As a result, the pricing in those areas will continue to move lower.”
Square’s Cash App began by letting their clients send money to friends, and, since then they had developed into debit cards and Bitcoin trading.
The truth is, Square doesn’t continually update of how many people are using Cash App. Be it as it may, the company said they had more than 15 million monthly active users as of December last year. Even though there isn’t an instant way to profitability for most free financial products, the game that enables you to add more users to platforms like Cash App has been pretty rigid, including other businesses as is, for example, PayPal Holdings Inc.’s Venmo that has been also seeing big growth.
Let’s also not forget that recently Dorsey said:
“Just from a business perspective, we don’t look like an Internet company today. An Internet company can launch something and it’s available around the world. Whereas with payments, you have to go to each market and pay attention to regulators. You need a partnership with a local bank. This is a very slow process in any new market.”
Right now, fintech companies that are offering such products earn their money only on the interchange fees in the cases when their clients are using their debit cards or on fees they charge for transferring funds to banks instantly.
In their most recent letter to shareholders, Square wrote that revenue from Cash App was $135 million for the quarter, excluding Bitcoin.