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Business Operations Business Models

How Does Cash App Make Money (Business and Revenue Model)

The Cash App business model

How Does Cash App Make Money?
Here’s what you should know:
  • What is Cash App, and how does Cash App work?
  • How does Cash App make money?
  • Instant Transfer Fees
  • Bitcoin Exchange Fees
  • Cash Card Fees
  • Cash by Cash App
  • Charging Businesses Transaction Fees
  • Cash App’s profit and revenue
  • What is the Cash App business and revenue model?
  • Cash App’s funding and valuation

How does Cash App make money if it’s free? Here is a full, in-depth, breakdown of their five (5) revenue streams and the different products and services they offer, as well as the Cash App business model, their year-over-year revenue, and how Cash App works.

What is Cash App, and how does Cash App work?

Cash App, a subsidiary of Square Inc., is a peer-to-peer (P2P) payment service that allows users to electronically send and receive money to one another using Cash App’s mobile phone app.

How Cash App works is: Once you download the app and choose a $Cashtag, you can link a bank account a debit card to your Cash App account to send or receive money to.

Launched and developed by Square Inc. on October 15, 2013, Cash App accounts for 62% ($5.9 billion) of Square’s total revenue with more than 36 million monthly users and over 100 million app downloads to date.

Some of Cash App’s competitors include PayPal, Venmo, Stripe, Zelle, and other mobile payment services.

Cash App in Apple App Store | Cash App Business Model | How Does Cash App Make Money?
Source: Apple App Store

How does Cash App make money?

Some of Cash App’s statistics include more than 36 million monthly users and over 100 million app downloads. As well as So how does Cash App make money off of all those users?

Below is a breakdown of how much money Cash App makes and its revenue model. Including all revenue streams and how much they charge for their services.

Here are the 5 ways of how Cash App makes money (in 2021):

Cash App has a revenue model that makes money in five (5) ways – instant transfer fees, Bitcoin exchange fees, charging businesses transaction fees, Cash Card fees, and Cash App’s apparel line.

#1. Instant Transfer Fees

Cash App makes money through instant transfer fees.

Cash App offers two (2) deposit speed options: standard and instant. Standard is free and takes 1 to 3 business days to arrive in your bank account. On the other hand, instant transfers arrive within seconds and come at a 1.5% fee of the deposited amount.

Cash App Instant Transfer Fees:

  • 1.5% fee (minimum fee of $0.25)

Note: This is a good example of a freemium/upselling business model.

#2. Bitcoin Exchange Fees

Cash App started accepting Bitcoin on their platform in 2017 and accounts for the majority of Cash App’s revenue. In fact, $4.48 billion or 76% of Cash App total revenue came from Bitcoin in 2020.

Cash App charges two (2) fees for bitcoin transactions: a service fee and an additional fee determined by price volatility across U.S. exchanges.

Bitcoin Purchase Fee:

  • Around 1.76% to 3% fee (depending on purchase amount)
Bitcoin Purchase Fee | How Does Cash App Make Money? | Cash App Business Model
Source: Cash App

Note: 76% of Cash App total revenue came from Bitcoin purchases in 2020.

#3. Cash Card Fees

Cash App rolled out a new product in 2017 called the Cash Card. It’s free to use, but the only fee associated with it is an ATM withdrawal fee charged by Cash App.

ATM Fees on Cash Card:

  • $2 fee + additional fee charged by bank

#4. Cash by Cash App

Cash App also has its own apparel line called Cash by Cash App.

The store sells merchandise like jackets, sweatpants, t-shirts, pants, and accessories, and currently has at least 33 items for sale ranging from $20 to $200.

Cash by Cash App
Source: Cash by Cash App

#5. Charging Businesses Transaction Fees

Cash App also makes money on the business-to-business (B2B) side through charging businesses transaction fees.

The way it works is: If a business accepts Cash App payments, Cash App charges that merchant a 2.75% transaction fee on each transaction.

Cash App Business Transaction Fee:

  • 2.75% per transaction

Cash App’s profit and revenue

In 2020, Cash App reported $5.9 billion in revenue.

Note: Because Square, Inc., the parent company of Cash App, is a publicly traded company, under the Securities Exchange Act of 1934, they must file continuous financial filings with the U.S. Securities and Exchange Commission (SEC). You can find all of Square’s publicly released financial reports, including annual reports, through Square’s investor section on their website.

What is the Cash App business and revenue model?

Cash App makes money through a few revenue models that they combine within their company, they are:

  • Freemium (upselling) business model
  • Fee-for-service (FFS) business model
  • Transaction based business model

Cash App’s funding and valuation

Cash App is estimated to have a valuation of $40 billion.