Startup Square is now offering businesses its Square Cash peer-to-peer payment service for a fee, hoping to generate more revenues from a cash transfer service that is free for consumers.
On Monday, Square said that the service would deposit customer payments directly into businesses’ bank accounts, for “an aggressive and affordable professional rate of only 1.5%.”
“Individuals aren’t the only ones who don’t like checks,” the company wrote in a post announcing the new initiative. “They’re inconvenient for businesses too, whether you’re a landlord, a lawyer, a dog-walker, or an interior decorator. We think everyone should have access to a fast, affordable way to get paid, without the inconvenience or lack of security of cash and paper checks.”
The 1.5% fee is lower than the 2.75% Square charges on payments through its credit card reader. To start out, Square Cash will only work with debit cards.
Since small business owners might not want to publish their personal e-mail addresses and phone numbers, Square is introducing $Cashtags, an identifier that enables any business to create a personalized name like $ErinHills or $SunsetPhotography and get paid privately and securely through Square Cash.
$Cashtags can be posted in any marketing material to let people know they can pay the business owner with Square Cash, either from the Cash app or on the web at https://cash.me.
A New York Times article Monday said other companies such as Google, eBay’s PayPal, and Facebook have “dabbled” in peer-to-peer payments, but none have found a way to make money from it.
“It is a new direction for Square Cash, which until now has only been used for money transfers,” the Times wrote. “Square contends that Cash has been a quiet powerhouse since it was launched a year and a half ago; the company said it processes more than $1 billion in Square Cash transactions on an annualized basis.”
Which, according to Square, is why this new initiative should catch on with businesses.
“The strength of the peer-to-peer network increases the utility of what we’re doing here,” Brian Grassadonia, leader of the Square Cash project, told the Times.