You've Got Money
Square has struck one more blow against cash with the launch of a new system that lets any two parties with email addresses and debit cards send and receive electronic payments. Square Cash is billed as a person-to-person money exchange, for situations such as repaying a friend who sprung for dinner. However, it could have larger e-commerce potential.
Square is making sending cash -- for anything from paying back a friend for charging dinner to making a purchase -- as easy as sending an email. Square Cash links to a debit card and requires little action beyond putting the dollar amount in the subject line of an email.
Square Cash's sales pitch is simple: "You don't sign up, you just send an email."
Users send an email to the person they want to make a payment to, and CC firstname.lastname@example.org. They enter the dollar amount in the subject line. The sender can explain what the money is for in the body of the email, but that memo is optional.
Before the transaction is complete, the sender will receive an email reply from Square requesting debit card info, and once provided, the payment will be sent to the recipient in the form of a link.
After clicking on the link, the recipient will be directed to enter a debit card number, and the funds will then be directly transferred to that card's bank account. They will become available within one to two business days.
There are no fees for sending money via Square Cash. The service is currently limited to the U.S., a sticking point that drew complaints in the Twitterverse soon after Square made the announcement on Wednesday.
Free Money Transfers
Square Cash replaces traditional payment methods such as writing checks. It's billed as a person-to-person money exchange, for situations such as repaying a friend who sprung for dinner. However, it could have larger potential -- for example, to pay for services such as home repairs by a contractor, or to buy goods online. The absence of fees is a significant draw.
"Right now we're focused on providing customers with the fastest and easiest way to send money to anyone," said Katie Baynes, spokesperson for Square.
"I would imagine this is sort of an initial effort to get people to use it and not put up barriers," said Greg Sterling, principal analyst of Sterling Market Intelligence. "If there were fees, you could have people less inclined to use it. Over time, once they get a certain level of adoption, you may start to see fees around using it."
No fees are likely as long as the system uses debit cards exclusively. However, if Square should open Square Cash to credit card transactions, it might have to start charging fees.
"Google has a similar policy, especially when a credit card is involved," Sterling told the E-Commerce Times. "
Square Cash competes with Google Wallet, PayPal and Venmo, among other services. It aims to set itself apart by highlighting its simplicity.
"Our goal with Square Cash was to remove the barrier to entry so that anyone could participate, anywhere -- which is why email is a great platform. Anyone can send money with Square Cash, whether from their home computer, laptop or phone," Baynes told the E-Commerce Times.
That said, Google Wallet is even simpler than Square, in Sterling's view.
Some early users of Square Cash might have security concerns.
"There is a danger in email because of autocomplete, because of contacts, because of how people use email," noted Sterling.
Even with a correct email address, there is concern about what happens when users start providing bank credentials electronically.
"It gets a little bit scary sometimes to link a bank account because people are concerned about hacking," Sterling said.
One precaution on Square's part is that Square Cash requires users to enter account details on its website, rather than emailing debit card numbers.
Once the system has been up and running for a while, hesitancy over using it will likely diminish.
"I think these systems will be ultimately quite popular," said Sterling, "and widely used by at least certain sections of the population."