Square Gets Into the Person-to-Person Payments Arena With its New Square Cash

By Jim Daly

In a move that apparently signals its intention to become a more diversified financial-services provider, Square Inc. on Tuesday introduced a person-to-person payments service called Square Cash. The service, which works through email or mobile apps, has no fees for either the sender or recipient and only requires that both parties have a debit card.

“Square has always believed in creating solutions for individuals and businesses that work with the tools they already have in their pocket,” Square Cash lead Brian Grassadonia said in a news release. “Square Cash makes it convenient to send money to anyone—without making them jump through hoops to retrieve it. Now it’s easier than ever to split a bill, send a birthday gift, or settle up with a friend, no matter where you are.”

To send someone money by email through Square Cash, a first-time user composes a new email by typing in the recipient’s address. In the Cc field, the sender types in “cash@Square.com.” Finally, in the subject line, the sender types a dollar sign and the amount to be sent.

The user, who can also type a short note to the recipient, then clicks send, which prompts a reply email from Square asking for his or her debit card number to fund the transaction, according to the release. That process also will link the sender’s bank account to Square’s system for future P2P payments. The recipient, meanwhile, is asked to enter a debit card number just once, and future payments will come into the corresponding bank account.

Square Cash works from any e-mail client such as Gmail, Yahoo, Mac Mail, Android Mail and Outlook. Square Cash also is available through mobile apps for Apple Inc.’s iOS devices and smart phones running Google Inc.’s Android operating system.

The new service once again puts San Francisco-based Square into head-to-head competition with PayPal Inc., but also with other P2P providers such as processor Fiserv Inc. with its Popmoney service, Fidelity National Information Services Inc. (FIS) with its People Pay, and the clearXchange service from mega-banks Bank of America Corp., Wells Fargo & Co. and JPMorgan Chase & Co. But with no fees, how Square will make money from the service was not immediately clear.

“Right now we’re focused on providing customers with the fastest and easiest way to send money to anyone,” a Square spokesperson said by email when asked by Digital Transactions News. “We’re always exploring ways to deliver more value to our customers and we will continue to deliver great products in the future.”

Square Cash has few apparent connections with Square’s main existing products, which include its cube-shaped card reader for accepting card payments on mobile phones; Square Register, a mobile-payments service for small businesses, and Square Wallet, a consumer-facing mobile-payments and loyalty service. San Francisco-based Square also provides merchant processing to coffee king Starbucks Corp. Thus, Square Cash could be a move by the fast-growing processor to bring an entirely new set of customers into its camp.