According to media reports on December 21, the Cash App, a money transfer tool owned by payment giant Square, claims that consumers can now get a bitcoin rebate every time they make a payment. Until now, the Cash App offered only dollar rebates.
Reports say the move could be an attempt to compete with PayPal, which has jumped on the cryptocurrency bandwagon, and is another sign of the growing acceptance of Bitcoin in mainstream payments. Bitcoin is becoming increasingly important for Cash App and its parent company, Square.
Cash app is a multifunctional payment App owned by Square, a SAN Francisco-based financial services and technology company, the number of bitcoins sold through the software has grown by more than 100 percent every year since the one-click purchase feature was introduced in 2018, the number of bitcoins sold in the first quarter of 2020 was almost equal to that of institutional investors.
Under the influence of COVID-19, Americans are reluctant to go to banks for transactions. In this special period, many users will choose online payment platforms to solve their needs. At the same time, many people who did not have a bank account before will open an account in the Cash App voluntarily in order to receive unemployment benefits of $600 per week from the US government.
With the help of these two factors, this has greatly boosted the penetration rate of Cash App in the United States.
According to Square’s earnings report, Cash App’s bitcoin transactions in the first quarter of 2020 amounted to USD 306.1 million, ten times sales in the first quarter of 2018, and gross profit reached an all-time high of USD 7 million.
In the third quarter of 2020, it sold $1.63 billion of Bitcoins through its Cash App, with a gross profit of $32 million. This follows Square’s $875 million in revenue from bitcoin sales in the second quarter and $17 million in gross profit.
Analysts believe the extensive incentive marketing drive has driven down Cash App acquisition costs, allowing the App to recoup its costs within 12 months and driving LTV’s rapid growth. Square has also benefited from the rapid growth of Cash App.
Square has been bullish on Bitcoin for years. Square’s Cash App allows users to buy and sell Bitcoins, and some analysts believe other payment companies will now have to facilitate cryptographic investments in some form or risk being left behind.It has also been found that the younger generation, or millennials, are particularly keen on cryptocurrencies such as Bitcoin.
Although the Cash App currently accounts for only about a third of Square’s gross profit, revenue from the business continues to grow at an alarming rate, driving Square’s growth.
The economics of this space are so compelling that it’s increasingly competitive with more players like PayPal (PYPL), Shopify (SHOP), and Stripe.
BlockFi, a cryptocurrency lending company, announced a partnership with Visa to launch a Bitcoin credit card in early 2021.
Source: TechWeb, etc