Evan Vitale Consulting: Square Cash still isn't a business

Jack Dorsey loves Square Cash, the company’s free, digital money-transfer service. But three years after launching it, Square Cash still isn’t a business.

Dorsey acknowledged as much on yesterday’s earnings call when an equity analyst asked him for an update on the service. Dorsey first talked up the growth among consumers, without giving numbers, and called it “the fastest peer-to-peer” money transfer service out there.

But when it came to describing results of Square Cash for Business, the feature that lets business owners like tutors and landscapers accept payments via the app for a fee, he was more circumspect.

“We’re seeing some interesting moves here, but a lot of the focus and the momentum is on the peer-to-peer side,” he said. Square has “a lot of designs” around how the service could help the larger business eventually, he said, but declined to share more.

Translation: Square Cash still isn’t a business.

Square Cash isn’t alone in that aspect among its free-to-use competitors. Venmo, which is much larger than Square Cash, hasn’t figured out the business angle yet, either. But earlier this year it launched a way to pay in some apps using your Venmo credentials instead of card information, and it is charging app makers a transaction fee to accept those payments.

At some point you would think these services need to help generate real revenue. They are both free-to-use for consumers, but each transaction costs Square and Venmo money to process.

The best example of a free money-transfer service that helped to build a real business is probably PayPal. It was a peer-to-peer money-mover before it became a payment method on e-commerce sites like eBay. Now it’s worth $48 billion.

One idea Square could be working on? Letting Square Cash users utilize the app to pay for products or services they buy in physical stores. That would essentially be an attempt to revitalize Square Wallet, which failed once. But Dorsey hinted at such a move last year.

“I still want [the Square Wallet] experience, personally,” he told Re/code on the day of the company’s IPO. “I think Square Cash shows a path.”

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