In a move that could help improve its profitability, Square, the six-year-old payments startup,announced Monday that it is expanding its money transfer service, called Square Cash, from consumers to include businesses throughout the U.S.
The company said Monday that it is now processing more than $1 billion in peer-to-peer payments annually.
Square is effectively doubling down on payments, which was a largely ignored sector populated mainly by financial firms until a few years ago. Now. is attracting the biggest names in tech, eager to capitalize on their vast networks of users. Facebook confirmed last week that it will add a payments option to its Messenger application, giving users a way to quickly send and receive cash from friends and family. Others like Google, Amazon and Venmo, currently owned by eBay, previously launched similar efforts with some mixed results.
The fee to businesses for the new payments feature is lower than Square’s fee for its credit card processing system, which demands 2.75% per transaction. Stripe, a rival mobile payment processor, charges 2.9% for each transfer plus $0.30 per successful charge.
“Peer to peer payments are typically a loss leader,” Rick Oglesby, a senior analyst for Double Diamond Payments Research, has said. “Consumers are just not accustomed to paying a fee in order to send money to someone, but there is a cost so most companies do it for free as a loss-leader for something else.”
Mashable, March, 23, 2015
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