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Cash App, like most peer-to-peer payment apps, is free to use. In spite of this, the company generated $1.23 billion in fiscal 2020 gross profit. So, how much Cash App revenue does the platform generate?

Cash App is owned by Square, a mobile payment company based in San Francisco. In its Q4 2020 earnings release, Square disclosed that nearly half of the company’s fourth-quarter profits were driven from Cash App. Cash App’s gross revenue in Q4 was $377 million, while Square’s overall gross profit in Q4 was $804 million.

Furthermore, Cash App’s 2020 gross profit was up 168 percent year over year to $1.23 billion, while Square’s 2020 gross profit was up 45 percent year over year to $2.73 billion. Cash App’s immense growth in revenue is largely responsible for its parent company’s evident success.

Cash App By Square

Cash App now has over 30 million active users on its platform. While Cash App is free for people to use, the average Cash App customer generates approximately $30 in revenue for the company each year. How does Cash App turn a profit? This article explores Cash App’s revenue sources and which of these sources drive the most profit for the company.

1.  Instant Transfers

Transfers from your Cash App account to your bank account are normally free, but they can take 1-3 business days to complete. If you want to transfer those funds out of Cash App instantly, Cash App charges a 1.5 percent fee.

So, for instance, if you have $100 sitting in your Cash App account that you want to transfer out immediately, Cash App will receive $1.50 from the transaction. This may seem like a small cost to you, but when you add up Cash App’s 30 million users and consider that many of them are using this feature, the revenue starts to add up.

2.  Credit Card Fees

Cash App provides users with the option to make payments with a credit card, rather than a debit card or bank account. If you choose to use your credit card for transactions within the app, Cash App tacks on a 3 percent fee to each transaction.

Transactions are free when you use a debit card with Cash App, but some people may prefer to use a credit card. So, while Cash App doesn’t earn credit card fees from every one of its users, the company earns some revenue from those who choose to utilize this option.

3.  Bitcoin Fees

Cash App isn’t just a peer-to-peer payment app. It also allows users to buy and sell bitcoin through the app.

In fact, bitcoin transactions were the leading source of revenue for Cash App in 2020, accounting for 76 percent of its revenue. More than 3 million customers purchased or sold bitcoin through the app in 2020, and over 1 million customers purchased bitcoin for the first time in January 2021 alone. During Q4 of 2020, Cash App generated $41 million in gross profit from bitcoin.

Buy And Sell Bitcoin With Cash App

How does Cash App make money from bitcoin transactions? Cash App charges two separate fees when you buy and sell bitcoin. The first is a transaction fee of up to 1.76 percent. The second is a price volatility fee which varies from 1-4 percent depending on market volatility at the time of the transaction. Cash App may also buy bitcoin from users at a lower price than what they sell it for, making a profit on the difference.

“Bitcoin has helped increase gross profit per active customer and engagement in our broader ecosystem as bitcoin actives use other products, such as Cash Card and direct deposit, more frequently compared to the average Cash App customer,” the company stated in its shareholder letter. While bitcoin remains a chief source of revenue for Cash App, users who engage in bitcoin transactions tend to use the platform in ways that earn the company even more revenue.

4.  ATM Fees

When you sign up for Cash App, you have the option to receive a free debit card, called a Cash Card, with which you can make purchases using your Cash App balance. This enables you to spend money from your Cash App account at any register or online.

When you want to withdraw physical cash from your Cash App balance, you can make a withdrawal at an ATM. Cash App charges a $2 service fee for each ATM transaction. This does not include the fees charged by the ATMs themselves.

Cash App does reimburse ATM fees for users who receive direct deposits into their Cash App accounts. To qualify for reimbursements, you must receive at least $300 in direct deposit paychecks every month.

5.  Business Transaction Fees

Businesses who accept Cash App payments have to pay Cash App a 2.75 percent fee per transaction. For example, if you pay your gardeners $150 for their service using Cash App, the gardeners would have to pay $4.13 to Cash App for the transaction. The transaction would still be free to you; the business or merchant pays for the ability to accept Cash App payments from customers.

Again, this may not seem like much money, but if you total all of the businesses who accept Cash App payments and consider the number of transactions these businesses do every day, the fees start to add up.

6.  Payment for Order Flow

Another feature that Cash App offers beyond simple peer-to-peer payments is the ability to buy and sell stocks. Cash App does not make money from the stock investments themselves, but they do engage in a process referred to as Payment for Order Flow. This is a common practice among investment banking apps that don’t make money from commissions.

Here’s how it works: Cash App receives a small payment for routing customer orders to third-party Market Makers. The Market Makers essentially act as middlemen; they make money off of the difference between the stock’s buy and ask price. They can then use that money to buy more orders from Cash App.

7.  Cash App Acquisition of Verse

Cash App recently acquired Verse, a European peer-to-peer payment service. Formerly, Cash App’s service, and therefore its revenue-generating opportunities, were limited to the United States and United Kingdom. With its acquisition of Verse, the company will be able to expand its reach to include millions of customers, scaling its revenue even higher.

Cash App's Acquisition of Verse

8.  Cash App Loans

Cash App is rolling out a loan feature, but it is currently in beta with approximately 1,000 users testing it out. Currently, users can take out Cash App Loans between $20 and $200. They will then pay the loan back within 4 weeks at an interest rate of 5 percent. If a user is unable to pay back the full loan balance within 4 weeks, they must pay an additional 1.25 percent interest rate for each additional week. Cash App earns money from these interest rate charges.

Assuming Cash App releases this feature after beta testing, Cash App Loans could become another significant form of revenue for the company.

9.  Cash App Referral Program

The more users Cash App is able to drive to its platform, the more revenue the company can make from all the methods listed in this article. The Cash App Referral Program is a form of viral marketing that incentivizes signing up for the app.

When you sign up for a Cash App account using a Cash App referral code, you’ll automatically receive $10 just for signing up. You can continue earning money by referring more users to sign up for the app with your unique Cash App referral code. Every time a new user signs up for Cash App using your referral code, you’ll earn a $30 commission.

Cash App Referral Code

The referral program is one of the primary ways Cash App has grown its user base. The more users Cash App has on its platform, the more revenue-generating opportunities it has. Even though the company loses $40 when a user signs up through a referral code, Cash App ultimately makes a return on this investment since the average Cash App user generates approximately $30 in revenue per year.

Final Thoughts

Cash App is free to use, as long as you’re only using it to make peer-to-peer transactions with a debit card. The company’s revenue model relies on the likelihood that you and other users will take advantage of some of its extended features. Whenever you buy and sell stocks or bitcoin, initiate an instant deposit from Cash App to your bank account, pay merchants using Cash App, or share your Cash App referral code, the company makes money.

Cash App’s model seems to work, as evidenced by its revenue and growth in comparison to that of its parent company. Users can enjoy a free service that only charges them small fees when they take advantage of the app’s broader features. In return, Cash App continues to grow its user base, garnering more opportunities for large profits.

Do you also want to know how secure users are with Cash App? Read Is Cash App Safe? to avoid scams and keep your money safe on Cash App.