Square is expanding its Cash product to allow businesses
to accept payments. In addition, Square is announcing a new identity
system called Cashtags (technically $Cashtags) that allows people to claim a unique address that can be used by anyone to send cash directly.
I’ve been waiting for Cash to expand
to paying businesses. Cash itself is one of the cleanest, lowest
friction constructs I’ve ever seen to exchange money from one lazy
person to another — and that includes actual cash. Institutionalizing
the ability to use it to pay for services or goods only makes sense.
There will be plenty of people taking you through the
press release for Cash and rehashing the party line. But it’s late the
night before this embargo lifts and I’m running on a Monster energy
drink and some peanuts. So let’s break down these announcements like
friends. Just you and me, talkin’ bout postmodern cash.
This is Brian.
First, the businesses. I spoke to Square Cash lead Brian
Grassadonia about the new direction for Cash and some of the thought
processes behind this whole Cashtag thing too. Here’s the skinny.
Businesses can accept Square Cash payments of any amount
with no monthly limit. Personal users are still limited to $250 per
transaction and $2,500 per week. This, Grassadonia explains, is largely
due to the low-friction nature of Cash. They require more information
from an individual user before they let them send more — businesses must
provide this info including a name, birth date and last four digits of a
Social Security number right off the bat.
Businesses are also the first to be charged for the
privilege of using Cash — a flat 1.5% fee is taken from each
transaction. Personal users are still not charged a fee.
At this point, I flat-out asked
Grassadonia whether Square would make enough from those business
transactions to make Cash come in above the water line on the books.
“We’re building a cost structure around square cash that is super
competitive. It makes sense for both us and our sellers,” Grassadonia
said, which I thought was a great answer, if not an especially detailed
one.
These businesses, by the way, are not intended to
be standard brick-and-mortar retailers, though it is possible for them
to sign up and use Square Cash. There is no provision for detailed
back-and-forth about serial numbered items or complex SKU inventories,
for instance.
Instead, this initial rush is aimed at non profits, artists, Twitter people, online media folks and entrepreneurs. Wikipedia, KhanAcademy, USO and RED
all have Cashtags assigned at launch. A YouTuber adding a Cashtag
graphic to their video has instantly enabled an additional revenue
stream outside of ads. Like Patreon, but zero friction.
One type of business that makes sense for this phase of
Square Cash? Services. Photographers, for instance, will be quoted in
Square promo materials for this rollout and (as a former photographer) I
think this makes a lot of sense. There isn’t a complex inventory, the
volume is (relatively speaking) low and the rate is far, far, better
than any credit card processing option — including Square.
Square Cash payments are, as always, deposited and debited
directly from bank accounts, instantly allowing any business that fires
up a Cash account to side step the sometimes prohibitive fees
associated with taking cards. Couple that with the incredibly
low-friction on-boarding procedure of Square Cash and you’ve got
something interesting.
Which brings us to…ahem…$Cashtags.
$Thisisathing
These are unique IDs that anyone can claim at Cash.me,
a new website for Square Cash. At first glance, this seems like a
vanity URL, and it is. Cash.me/$Panzer is a profile page, for instance,
that lets people see me and make payments directly. But it’s more than a
vanity thing — and when you see it…
Square Cash is about ‘replacing paper cash and checks’
will be the chant (do a search of the news today, I dare you) that
you’ll hear. It’s a sidebar business to Register, Capital, Reader, et
al. I get it, it’s a compelling offer and it’s not inaccurate. But to
me, the addition of Cashtags to Square Cash accomplishes two things.
- It widens the orbit of Square Cash.
- It disconnects a transaction from any personal information — beyond perhaps a name.
The first point is an easy one to understand. Previously,
Square Cash was ostensibly limited to people who you knew, or at least
wanted to share a bit of personal info with. If you were inclined, would
you Square Cash a random street performer if it meant you had to share
your phone number? Probably not. Would you do it if they had a sign with
$Radicalbiketricks printed on it, and you knew all they would ever see
would be your own Cashtag? More likely.
This, incidentally, is why I don’t really see Facebook’s new Messenger payments
on parity with Square Cash. I’m sure a lot of people will use that, and
that’s cool. It’s not my problem which system is more popular, that’s
for Mark and Jack to worry about. But if you’re talking about the wider
orbit of people you don’t know — only Square Cash is currently set up to do that in a way that makes you comfortable.
Which leads us to the second point.
Un-linking financial and personal information from a
transaction is nearly impossible unless you either own the payments
stack or wield a massive amount of clout — enough to distort the girders
of consumer finance.
Of all the payments systems out there, only two have
proven willing to do this. Square does it the first way, Apple does it
the latter.
Sure, Cashtags act as an easy, public and distributable
way of funneling cash. But they also act as a firewall that disconnects
the act of passing money from one party to another from the actual
financial underpinnings. You send Square money, Square digitally
launders the money to remove the stench of your personal information and
hands it off to the receiving party in the form of a fresh digital bill
with a scribbled ball-point $Cashtag on it.
Moneyeball
Here’s why this matters: messing with people’s money is like touching their eyeball.
People will stand in line for hours for a free $3 cupcake
or bobblehead or whatever, and they’ll only complain on Twitter or
Meerkat. Expose them to any amount of risk of some weirdo
possibly maybe being able to swipe $3 from your account without them
knowing and they will sign a class action suit so fast your head will
spin.
At least they would if they even realized the amount of
risk they expose themselves to by simply handing a check with an account
and routing number on it to anyone who asks. Or by handing over a
credit card number that doesn’t change for years to a crappy
under-protected security system at a big box retailer to be scraped by a
credit card number farm in some other country.
Aside from the regular old credit card fraud loopholes
you are undoubtedly safer paying with a one-time token via Apple Pay
than you are using plastic. The same goes if you pay using a Cashtag and
Square Cash at a business.
Of course, all of this fun stuff doesn’t mean that Square
Cash will be massively profitable for Square. They undoubtedly hope it
will act as a brand ambassador, pulling additional people into Square’s
ecosystem and building brand identification and trust. Good luck.
Selfishly, I hope it works because my friends and I send cash to each
other constantly for this and that. It keeps us all honest and prevents
any grumpiness over what is owed whom.
But on a larger scope, the Cashtag may have an outsized
effect on the way we think about payments and identity, for several
reasons.
Cashtags are instantly understandable, and recognizable.
You could see them at the bottom of a non-profit donation ad or
scribbled on cardboard next to a swap meet table.
Making Cashtags instantly actionable turns any scrap of
paper into a secure portal for cash. It also makes it feel safe in a way
that pulling out your wallet in public and counting off bills almost
never does.
Those factors could combine to make this announcement less silly than a dollar sign replacing a pound sign.