How Cash App Makes Money

Cash App is a popular peer-to-peer (P2P) payment service. To make payments, you need the contact's phone number, QR code, or email, and can then either send or receive money, which is free of charge.

Cash App is owned by Block, Inc. (SQ) (formerly Square, Inc.), a leader in the financial technology industry. Cash App is just one part of Block's business offerings, which also include software and point-of-sale hardware for businesses of all sizes as well as cryptocurrency services.

Since going public in November 2015, the company has quickly grown into one of the largest payment processing companies in the United States and has expanded its business model beyond payment processing to include enterprise offerings such as scheduling, employee management, and business analytics.

Block (Square at the time) launched its Cash App service in 2013 to compete with services like Venmo, Paypal, Apple Pay, and Google Pay. Such peer-to-peer (P2P) payment services allow consumers to use their smartphones to pay for goods and services, pay bills, and transfer money to friends and family.

Cash App has expanded its functionality beyond just a peer-to-peer payment service; users can also receive direct deposit payments and ACH payments, as well as purchase cryptocurrency through the platform. More recently, Cash App introduced an investing feature called Investing that allows users to trade stocks and ETFs commission-free within the application.

In 2018, Cash App surpassed Venmo in downloads, with 33.5 million cumulative downloads. As of September 2023, Cash App had 55 million monthly transacting activities. Venmo has about 90 million active users.

Cash App's Financials

Cash App is free to download and its core functions—making peer-to-peer payments and transferring funds to a bank account—are also free.

Cash App makes money by charging businesses and individuals transaction fees, from subscription services, and selling Bitcoin to customers.

Businesses and users are charged various fees, for instance, instant money withdrawals (instead of the typical two- to three-day transfers, which remain free) cost 0.5% to 1.75% of the value transferred out. Sending from a credit card will also be subject to a 3% fee.

Subscription services include Cash App's financial services-related products, including Cash App Card, Cash App Instant Deposit volumes, and related processing costs and fees.

The Bitcoin segment of Cash App's business is its largest revenue generator. In addition to a service fee charged for selling Bitcoin to its customers, there is generally a 1% to 4% difference in what Bitcoin exchanges and individuals pay for Bitcoin. Cash App factors these differences into the prices it offers its users, generating additional revenue on the exchanges it facilitates.

Cash App is a subsidiary of Block, Inc., which reports revenues based on its three business segments: Cash App, Square, and Corporate and Other. Cash App reports revenue in three segments: transactions, subscriptions and services, and Bitcoin.

For its third quarter fiscal year (FY) 2023, for the period ending Sept. 30, 2023, Cash App brought in revenues of $3.58 billion; an increase of 33.5% year-over-year (YOY). The Cash App segment reported a gross profit of $983.86 million; a 27% YOY increase.

Revenue grew in all segments. Transaction-based revenue grew due to growth in Cash App Business gross payment volume (GPV), primarily driven by peer-to-peer transactions received by business accounts and peer-to-peer payments sent from a credit card. Subscription services revenue grew due to growth in Cash App's financial service-related products, including Cash App Card usage, Cash App Instant Deposit volumes, as well as interest earned on customer funds. Bitcoin revenue grew due to the increase in the quantity of Bitcoin sold to customers.

Cash App's Business Segments

Block reports Cash App's revenue by business segment but does not break out income by business segment. The three reporting segments for Cash App are (1) transaction-based revenue, (2) subscription-services revenue, and (3) Bitcoin revenue.

Transactions

Transactions include fees charged for peer-to-peer transactions made by businesses and individuals. This segment saw revenues of $120.78 million in Q3 2023; a 1.96% increase from $118.46 million YOY. This segment accounts for 3.37% of Cash App's revenue.

Subscription Services

The Subscription Services segment includes Cash App's financial-services products, which include Cash App's card, Instant Deposit volumes, and interest earned on customer funds. This segment saw revenues for Q3 2023 of $1.04 billion; a 29.48% increase from $803.67 million YOY. This segment accounts for 29.03% of Cash App's revenue.

Bitcoin

The Bitcoin segment brings in revenue from selling Bitcoin to Cash App customers. This segment saw revenues for Q3 2023 of $2.42 billion; a 37.49% increase from $1.76 billion YOY. This segment accounts for 67.60% of Cash App's revenue.

Cash App's Recent Developments

In June 2023, Cash App noticed a technical issue that was double charging customers for certain Cash Card transactions. The company fixed the issue and announced refunds to be made to customers.

In the same month, the Consumer Financial Protection Bureau (CFPB) issued a statement stating that consumers should not store their money for the long term in payment apps, naming Venmo, PayPal, and Cash App as examples. It noted that these accounts may not be safe because they may not be federally insured by the Federal Deposit Insurance Corporation (FDIC).