Hip-Hop’s Role In Square’s $40 Billion Cash App Business SuccessSeptember 23, 2020
Cash App, your rapper’s favorite smartphone-based payments and money transfer service owned by Square
The Breakdown You Need To Know:
Rappers have been using the fin-tech platform as a way to engage with fans for a while now. CultureBanx noted it’s easy to see how hip-hop influencers and their loyal followers grew Cash App’s monthly active users from seven million in 2017, to 30 million in 2020. In turn, these users also gained the attention of those in search of higher-end services like Bitcoin and general investing.
First created back in 2013, Cash App’s valuation is almost two-thirds of Square’s current $65 billion market value. Since hitting a pandemic low in March, Cash App’s parent company has seen its share price nearly quadruple. Even with the 1.5% fee the company charges users to to transfer funds to a bank account.
Researchers at the Federal Reserve Bank of San Francisco found that cash was used in just 26% of consumers’ monthly payment transactions in 2018, down from 33% in 2015. Additionally, the volume of money Americans transfer to one another through mobile phones is expected to increase 26% in 2019 to $211 billion, according to research firm eMarketer.
Banking on Cash:
There are 63 million U.S. adults left behind by banks, and these are the customers Cash App is directly targeting through its once-a-week giveaway, called Cash App Friday, where it distributes cash digitally to some users who request it. During a time where 40% of Americans would struggle with a surprise $400 expense this has also helped increase it’s monthly active users. Trapital noted that in January of this year Cardi B and Megan Thee Stallion gave 2,000 random Tweeters $500 apiece for a total of $1 million via the app. In 2019, Cash App gave away $60,000 on its namesake Friday.
Giving away money may seem like a counterintuitive business strategy, but it’s perfect for Cash App. The company’s revenue comes primarily from subscriptions and services, not peer-to-peer transactions, meaning it still needs downloads.
Bitcoin’s Cultural Come Up: Cryptocurrencies especially Bitcoin also played a major role in getting the company to a $40 market cap. It was back in 2017 when Cash App introduced the ability to trade Bitcoin, prior to the cryptocurrency’s peak valuation. Bitcoin accounts for about half of Cash App’s revenue, according to Coindesk. Excluding Bitcoin sales, the app’s revenue hit $325 million in Q2 of this year.
ARK research found that PayPal’s