Square Opens up Cash Drawer
Square Inc. has added a new feature to its Square Cash P2P money transfer service that enables users to store funds within their Square Cash accounts—a move that means the service can fulfill some of the functions of a mobile wallet. With the new Cash Drawer feature, users can keep money received via P2P transfer in Square Cash, rather than moving it into a bank account. Stored funds then can be used to make payments, or subsequently transferred to a bank account using the Cash Out button.
By adding the ability to store funds, Square could be positioning Square Cash to eventually compete with full-scale mobile wallets like Apple Pay and Samsung Pay, notes Rick Oglesby, senior analyst, Double Diamond Group. “Over the longer term, it’s a big strategic change for Square,” Oglesby tells Paybefore. “It changes Square Cash’s platform from a transaction processing platform to a pseudo banking platform, from which many new products can be launched.” Keeping funds within Square Cash also benefits the company’s bottom line, Oglesby notes. “It will help Square make a bit more money on Square Cash by keeping balances within Square so that they can be spent at a later time—most likely for the same transaction fees that Square currently charges, but without the expense of additional across-the-network transactions.”
Cash Drawer also could appeal to small merchants that accept Square Cash and may prefer to keep their business payments in one place, rather than depositing funds into a bank account—an option P2P services from PayPal and Venmo offer their small business users. Square first dipped a toe into the mobile wallet waters in 2011, with the release of the Square Wallet app, one version of which enabled users to pay via linked payment card simply by saying their names after checking into a store via the app. However, Square Wallet failed to catch on and was shuttered in mid-2014.