Square’s Cash App Reportedly Looking to Offer Stock Trading
Among many small business owners and patrons, Square is known for their point of sale interface and — before that — their card readers that allowed smartphones to become cash registers. While those are still cored products, the company has frequently expanded into other areas of FinTech. This includes their peer to peer payments app known as Cash. Now it looks like Square will expand the scope of Cash by enabling commission-free stock trades.
According to a report by Bloomberg, Square is exploring stock trading capabilities for the Cash app. Sources tell the site that employees are currently testing such a feature, although a spokesperson for Square declined to comment. Nevertheless it seems that plans would call for these trades to come commission-free.
If Square’s Cash app did integrate free stock trading, it would put them in direct competition with Robinhood among others. That app has reached a reported $7.6 billion valuation by making stock and ETF trading more accessible to beginning investors. Meanwhile other free trading options have also emerged, including SoFi Active Investing. Commenting on this trend, JMP Securities analyst Devin Ryan told Bloomberg, “We are seeing the cadence of free trading increase and I do think that’s something the broader industry can’t dismiss. As a result, the pricing in those areas will continue to move lower.”
Initially envisioned as a P2P app akin to Venmo and others, Cash has gained some other notable features over the years. For example users in all 50 states are now able to buy and sell Bitcoin from the app. Additionally Cash users can obtain a unique debit card that not only links to the Cash app funds but also offers “Boosts” on purchases from select partners.
One notable aspect of Robinhood in comparison to Cash is that, while it does offer a free tier, it also makes money thanks to its Robinhood Gold option. Currently it’s unclear how Square will monetize its proposed trading platform. That said, when previously speaking on profits from Cash’s Bitcoin sales, Square CEO Jack Dorsey commented, “It’s not a major monetization engine. The goal is to continue to drive utility in the Cash App.” Therefore it seems likely that the company would view commission-free trades in a similar way (at least for a time).
In many ways, the addition of free stock trading seems like a logical expansion for Square and their Cash app. As previous efforts have shown, the company has no reservations about venturing into new territories under the FinTech umbrella. While it may be some time before such a feature is ready to roll out, there’s no doubt that this Bloomberg report will get people talking — and perhaps make Robinhood a bit nervous.
Also published on Medium.