Last week, the industry was all atwitter when Jack Dorsey, CEO of Twitter and Square, tweeted a photo of a physical Square Cash card that was hypothesized to be a debit card. The site Recode stated:Square Cash appears to be acting more and more like a bank.
The Venmo-like service started as a way to simply send money to friends and family online, but it has recently been adding ways to spend the money that you receive and store in the app.
The next step? A physical Square Cash debit card, it seems, based on a photo tweeted by Square CEO Jack Dorsey on Thursday night.Other than the photo, there appears to be very little to go on to determine if this is truly a debit card as the article suggests or a prepaid card. Either product would move Square from a transaction and payments technology provider to an entity that is much closer to a financial institution, with all the regulatory trappings that goes along with that categorization. Square will need to determine if the effort involved in becoming more bank-like is worth the capability that would allow Square Cash balances to be used not just at merchants who can accept their virtual product, but also those that require a physical card:Square may end up incentivizing Square Cash users to spend their money at Square brick-and-mortar merchants, since the company would make money from both sides of those transactions. And because not all merchants accept the Apple Pay service necessary to accept Square Cash virtual cards, a physical card would be needed for broader adoption.
Overview by Sarah Grotta
, Director, Debit Advisory Service at Mercator Advisory Group
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