why is cash app popular

The app is expanding beyond peer-to-peer payments to become an all-in-one personal finance hub.

The Cash App from Square has been on a tear recently. It’s a competitor of PayPal’s Venmo, which lets users instantly send money to people or businesses without using physical cash. The app has been growing quickly, but in the face of stiff competition, what keeps people from defecting to one of the Cash App’s rivals? The Cash App seems to have three key features that help it hold onto its users.

The Cash Card

Debit card users can get the Cash Card for free if they use it. It is just like a regular card, except that instead of being connected to a bank, it is connected to a Cash App account. Cash Card users can spend their money anywhere Visa is accepted, which is almost any merchant today. Over 7 million people use the Cash Card each month, and it’s the boost function that distinguishes it. If someone uses the Cash Card at a partner location, they’ll get a boost, a credit card-like cash-back incentive. Door Dash users can get 10% off any order that is paid with the Cash Card. Square makes money on the Cash Card by taking 2.5% of every sale from merchants. It is important for investors to understand how Square has started to monetize its users, because this is no different than a traditional debit card.

Bitcoin and investing

Users of the Cash App can buy and invest in fractional shares of blue-chip stocks with their money. This isn’t a game-changer, and the company won’t be competing with big-name brokerages for deposits anytime soon, but it’s a great way to attract new users and increase activity. The $875 million in revenue generated by the app last quarter is an sign that users love the feature. Square stated in its latest earnings report that Cash App users who were active on two or more products generated three times as much revenue as someone who only used peer-to-Peer payments. While the investing features may not directly generate cash for Square, they can indirectly lead to a higher average revenue per user number. It makes the product stickier because users get more reasons to rely on it for their personal finance needs.

It acts like a bank

Square doesn’t currently have the permission to run a bank for individuals. To make it easier for people to get direct deposits to their Cash App accounts, it collaborated with a private bank to provide account numbers. The app is close to being comparable to traditional banks. The Cash App can be used by anyone who wants to spend, send, grow, and receive money in one place. The Cash App has an advantage over other P2P apps and traditional banks because it is the first app to combine every personal finance need in one place, reducing friction and adding convenience for users. If Square applies and gets approval to provide banking to Cash App users, it will be able to pay interest and compete on an equal playing field with legacy offerings. Even though Square has been killing it with the Cash App, the competition is still formidable. Venmo has 52 million users, and its parent company, PayPal, just announced it will be letting its 346 million users buy, spend, and hold cryptocurrencies.

The Cash App has been able to grow its users at a 60% rate because of its ability to innovate and provide a better value proposition to its users. It is possible to make a transaction with Venmo at 50%. The average revenue per user has more than doubled since the beginning of the year, as the app currently has 30 million monthly active users. If it continues to grow at triple-digit or high double-digit levels over the next few years, the app could add a lot. Past performance doesn’t guarantee that the Cash App will continue to grow at a rapid pace. Square could end up being a great boon for shareholders if they continue to innovate with the product.

54% of Cash App Users have a Credit Score Less than 600

The first thing we looked at was who is using the Cash App. To get a sense of the composition of the app’s users, we broke it down by their FICO scores. More than half of the Cash App user base have credit scores under 600. There is a smaller part of the user base for each credit score bucket.

72% of Cash App’s Users Come from Just 10 States

The next thing we looked at was where the Cash App users are located, after we got a picture of who was using the Cash App. Texas, California, Florida, and New York are the only four states that make up more than 50% of the total Cash App user base. The Cash App has a large majority of users from the top ten states. The United States has ten states that are among the most populated. Many of them have major metropolitan areas. It is not surprising that Cash App has user bases in each of them. Texas has a larger population than California, so it’s surprising to see it edge out the other states.

Transaction Volume Grew by 10x Over the Last 15 Months

Since then, we’ve taken a look at how the Cash App has grown over the last 15 months.

We first looked at which products were driving the highest growth rates, and they were in-season merchandise such as t-shirts, hoodies and jackets.

Our research shows that cash app users transfer about $50 per month on average.

Over the last year, transaction volume on Cash App has seen relatively steady growth.

Transactions in April 2019 were lower than they had been at the same time of the year in 2018. Transaction volume for the period from November 2019 through February 2020 grew at a pace of around seven times what we saw in April 2019. Then, in March 2020, we saw transaction volume start to rise each month, reaching about 10 times that of April 2019’s transaction volume. Many explanations could be provided for the massive increase in transaction volume over the last month, but I think the COVID-19 pandemic has definitely contributed to the rise. Many American citizens were granted stimulus checks as part of the CARES Act. The bill was meant to ease the financial burden of the crisis. We’ve created a cash app to help you get stimulus funds on-demand. This led to an influx of users who then proceeded to use their stimulus money via the Cash App platform.

Cash App Users Make 6+ Transactions Per Month

After that we looked at how the number of transactions per user grew over time.

Transaction per user saw consistent growth over the last fifteen months.

1.From April to December 2019, the number of transactions per user on Cash App grew from 4. Transactions per user declined in February, March and April, but surged starting in May and peaked at ~6.8 transactions per user in June. Again, this coincides with an uptick in the number of active users during that same time.

Average Transaction Dollars Per User More than Doubled

We looked to see how transaction volume had grown for individual users after seeing that users had been making more transactions on Cash App. The platform has been growing over time, despite ebbs and flows, and a close look at the transaction volume per user shows that. By October of that year, the average transaction volume per user had grown to $750. The first few months of 2020 were stagnant as growth dipped at the end of 2019. In April of last year, the transaction volume per user was more than double what it was in June of 2020

Transactions Volume Grew by 2.5x for Users with Credit Scores Under 600

The last step is to dig a little deeper into transaction volume for individual users.

We looked at how much the users with the highest FICO scores transferred compared to those users with the lowest credit scores.

Credit score transactions are only the tip of the iceberg.

1.Average Cash App user’s credit score grew by Cash App.

2.8% from 2018. Those with lower credit scores had faster growth rates than those with higher credit scores. This is probably telling, but it makes sense given what we know from the above analyses.

Between March and June 2020, the transaction volume was up. More than half of the Cash App users have a credit score under 600. The graph shows that Cash App users with low credit scores are increasing their number of transactions more quickly and consistently than their high-credit-score counterparts. This suggests that user confidence in and adoption of Cash App was already growing among those users with the lowest credit scores, unlike some of the above analyses.

Why Are Lower FICO Score Users More Drawn to Cash Apps?

David Baddeley of Scottish Trust Deed thinks it might be a combination of ease of access and Cash App being an alternative to large banks. People with lower credit scores feel that banks and financial institutions are against them and that they use such services. In an era when distrust of corporate entities is on the rise and the number of financial tools and options is ever-growing, Bad, an app that can substitute this would be more than welcome in the eyes of those that don’t understand finance. It makes sense that people who have been told by financial institutions that they are not good enough would look elsewhere. With the rise of new financial technologies that have lower barriers to access than many bank products, it’s likely these trends will continue to increase.

Methodology

This analysis is based on data collected from more than 5,100 Cash App users who applied for a loan with Stilt between April 1 and June 30 of 2020.

Need a Loan? Get One in 3 Simple Steps

If you are interested in applying for a personal loan, follow these 3 simple steps.

Apply

You can apply online for a loan. Provide your best application and submit the required documentation. Stronger applications will get better loan offers.

Accept

You will be contacted by the lender if your application meets eligibility criteria. If it’s required, give any extra information. Soon you will receive your loan offer. The lender may send a promissory note with the loan offer. If you want to accept the loan offer, you need to sign and return the note.

Repay

Your U.S. will get the loan disbursed into it. Some banks will be able to open a bank account within a reasonable number of days. Setting up your repayment method is what you need to do now. It’s possible to choose an autopay method online to help you pay on time.

About Stilt

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How Secure Is a Cash App?

The Cash App uses the same protocol used by major credit card companies.

Payments are encrypted on both ends. They are no less secure than using a credit card,” says Farah Sattar, computer engineer and founder of DECRYPTED.

Even though the app’s security features are solid, remember that your cash app balance is not FDIC-insured. This is definitely a strike against the service and something to keep in mind when you open an account. Cash App also allows you to invest in stocks and Bitcoin. That could amplify your concerns if you use it for investing purposes. Cash App is a registered broker-dealer, member FINRA and SIPC. “It’s perfect for those new to investing,” says Ryan Shuchman, partner at Cornerstone Financial Services.

Cash App doesn’t offer mutual funds, so it comes with drawbacks for investors. It is not possible to trade options or other advanced investment products. Cash App doesn’t have a lot of research and analytic features. Shuchman says that it is probably not an appropriate platform for bigger and more sophisticated investors.

Should You Buy Bitcoin on Cash App?

There are some good reasons to be cautious when buying cryptocurrencies with apps like Cash App, Venmo, and Robinhood. Cryptocurrencies are a relatively young asset class compared to conventional stocks, which contributes to its highly volatile value and big price swings by the day and even by the hour. It is smart to keep your investments to less than 5% of your portfolio, and to make sure they don’t get in the way of saving for emergencies and paying down high-interest debt, according to experts. Cryptocurrencies come with more features and industry-leading security measures that protect investors, which is why Cash App is easier to use.

Fraud Protection

Cash App payments can’t be cancelled once the money is sent, and most of the time they are made instantly. This definitely leaves room for fraud and other crimes of social engineering, because third party apps like this still put the responsibility on the user to make sure that they use strong security and privacy practices. If someone asks you to share your screen, do not do that. Sattar says anyone qualified to help will walk you through the steps without asking if you have a screen share or login credentials.

Frequently Asked questions-

Q. Why is Cash App so popular?

Ans-Sending and receiving money is easier with the Cash App. The added bonus of being able to invest and use a debit card with the service makes it a great tool for the digital age.

Q. Why is everyone asking for my Cash App?

Ans-Fraudsters often try to steal customer data and gain access to accounts by pretending to be a Cash App customer service representative. If someone claiming to be a Cash App service representative asks for your sign-in code or PIN, asks for you to send them money, or asks for personal information, it’s a fraudster.

Q. What is the point of a Cash App?

Ans-Cash App allows for peer-to-peer payment via your mobile device. Cash App users can get a Visa debit card that will allow them to use funds from their Cash App account or even withdraw cash from an ATM. To transfer money from your Cash App account to a bank account, you must have a working bank account.

Q. What is so great about Cash App?

Ans-Benefits of Cash App

Fees are not charged on basic services. Cash App doesn’t charge monthly fees, fees to send or receive money, inactivity fees, or foreign transaction fees. You can have an optional free debit card. Users can use the Cash Card to make transactions and withdraw money from their Cash App account.

Q. Is the Cash App to be trusted?

Ans-Cash App uses cutting-edge technology to make sure your data and money are secure. If you’re using a public or private wi-fi connection, your information is sent to our server securely, regardless of whether you use a 3G, 4G, or EDGE service.

Q. Why shouldn’t you use a Cash App?

Ans-The app is legitimate, but you should use it with care. When using the app, only send and accept money from people you trust, as scammers have found ways to trick people using the app.

Conclusion

Sending and receiving money can be done with the Cash App. The added bonus of being able to invest and use a debit card with the service makes it a great tool in the digital age, but your balance on Cash App is not insured, which means there is no. It isn’t a good idea to use a Cash App as a bank replacement. It is helpful to transfer small sums securely and instantly.