Businesses looking for a way to make or receive payments quickly have a new option from the merchant services company Square: Square Cash. Previously available only to individuals as a free service, Square Cash for businesses enables fast payments directly into a company's bank account for a 1.5-percent transaction fee.
In addition to expanding its Square Cash service to businesses, Square is also introducing a new concept called $Cashtags. Individuals or businesses with $Cashtags -- a unique identifier such as $Wikipedia -- can post their IDs online and off to promote direct payments and donations.
Square already provides a number of payment services and products for businesses, including the Square Reader, a small credit-card reader that can be plugged into any mobile device, and the Square Stand, a countertop stand that turns an iPad into a point-of-sale payment processing system. The company also provides software for inventory management, invoicing and sales reporting.
The Rise of Mobile P2P Payments
The new Square Cash for businesses aims to reduce the need for cash or checks, Square Cash Lead Brian Grassadonia wrote on the company's Web site. For a processing fee of 1.5 percent, Square will now deposit Square Cash payments directly into a business' bank account.
Introduced in 2013, Square Cash began as a free service for person-to-person money transfers. To send a payment, a user needs only the recipient's e-mail address and a valid debit card: e-mailing the recipient with the amount to be paid in the subject line and a cc to Cash@square.com enables a direct transfer of funds in less than a day or two.
Such person-to-person or peer-to-peer (P2P) payments are becoming increasingly popular on mobile devices. A recent survey by the banking advisory firm Novantas found that just over 20 percent of smartphone owners between the ages of 30 and 39 made a mobile P2P payment over the previous 30 days. The most commonly used apps for such payments include bank or credit union mobile apps, PayPal, Venmo, Google Wallet and Square Cash.
A 2014 report from BI Intelligence estimated that the global volume of P2P payments exceeds $1 trillion. Mobile P2P payments in the U.S. could reach $86 billion by 2018, the report predicted.
Marketing with $Cashtags
Square's new $Cashtags, also announced Monday, are intended to make P2P payments even easier. Rather than requiring a recipient's e-mail address or phone number, someone who wants to send a payment needs only another person's $Cashtag. The identifier enables payments via either the Square Cash app or the Web site, https://cash.me/.
"We think $Cashtags are a fantastic marketing service that lets your customers, donors, fans, or even friends pay you quickly and securely," Grassadonia said. The identifier can be posted on Web sites, business cards, Pinterest profiles, store signs, YouTube videos and elsewhere to encourage customers to make direct payments to all kinds of business owners.
For example, Curtis Kulig, a New York City-based artist, uses the $Cashtag $LoveMe to raise funds for public art projects. Non-profits such as Wikipedia ($Wikipedia), Khan Academy ($KhanAcademy) and the USO ($USO) also use the identifiers to enable payments via Square.