Square’s Cash App continues to scale the bitcoin hype wall

As bitcoin prices ramp up at the end of 2020, Square has solidly benefited from renewed interest in the cryptocurrency. The firm’s Cash App continues to deliver on bitcoin trading revenues, growing profits 212 percent year over year.

In an effort to drive higher engagement and monetization, Square has added ancillary features to the popular app beyond peer to peer payments, like stock trading and a debit card. Those efforts are beginning to bear early fruit. The company is clearly focused on getting more users to download the app and giving them more reasons to spend time and money using the app.

The Cash App ecosystem

Cash App is benefiting from a growing ecosystem as customers adopt multiple products. The company is working to expand the number of users of Cash App through national marketing campaigns. Once they’ve downloaded the app, Square’s strategy is to continue to roll out products to keep them in the app. With a debit card, direct deposit, and stock brokerage, the strategy seems to be paying off, as KPIs point in the right direction.

In the third quarter of 2020, the number of average daily active Cash App customers nearly doubled from the same period last year, representing nearly a quarter of monthly transacting active Cash App customers.

Square measures net inflows — essentially, stored money — into Cash App as a metric for growth. As of the end of the third quarter of 2020, Cash App customers had more than $1.8 billion in cash balances stored in their accounts, up 180% year over year and up 7% quarter over quarter as stimulus disbursements ended during the third quarter.

By adding in additional ways to spend, send, store and invest their money, Cash App users are transacting more in the app. During the third quarter, customers with two or more Square products, like Cash Card or direct deposit, had 3-4x more transactions and generated 3-4x more gross profit compared to customers who only used P2P payments.

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Stock brokerage saw the fastest adoption of any Cash App product. Since its launch less than a year ago, more than 2.5 million customers have bought stocks using Cash App, and billions of dollars had been traded by the end of the third quarter. Square launched Auto-Invest, which allows for dollar-cost
averaging from recurring daily or weekly purchases of bitcoin or stocks.

While Square offers its stock brokerage product for free, these customers tend to be more engaged. Stock brokerage customers had 28% more transactions across the platform and generated 15% more gross profit after they adopted stock brokerage.

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