Square Cash Facilitates Direct Deposit, Blurring Lines Between P2P and Banking

Square has been pursuing a bank charter for several months, but in the meantime, they have been launching consumer banking services without the need of a charter.  First they provided P2P services to compete with the likes of PayPal and Google and have amassed 7 million users.  Next they created the option for consumers to store funds received through P2P transactions to fund purchase transactions, plus added a physical plastic card.  Now as TechCrunch reported, they will support direct deposit transactions to add to their available balances:

It seems like each new feature Square adds to its Cash app brings it one step closer to being a de-facto bank account for its users.

Case in point, the app just rolled out support for ACH direct deposits, meaning users can now get their paycheck or other deposits put directly into their Cash app balance.

This feature combined with the Cash app’s debit card now means that the app can essentially provide all the basic functions of a bank account, assuming you don’t need to deposit checks or do complex things like wire transfers.

 The client base Square has been able to attract is amazing, but there is nothing new here.  They offer a P2P service (10 year old product), a prepaid debit card (15 year old product) and ACH direct deposit (40+ year old product).   But they don’t need to be innovative on this front.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group

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