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What happened
Fintech actions Square (NYSE: SQ) rose 2.7% in trading on Tuesday after the company announced a large integration between the Square app and the Cash app. Shares are down 0.2% with a few minutes of trading remaining, although this is largely due to the market as a whole having moved from equilibrium at the start of trading to just under 1% towards the end of the negotiation.
So what
The announcement was that Square sellers will now be able to accept Cash App Pay both online and at their terminals. This opens up a new payment option for businesses and allows customers to access funds in their Cash App account.
While adding a payment method might be a small move, it’s the underlying fees where Square will see the biggest impact. The majority of the approximately 2.9% fee charged to sellers for making credit or debit card transactions goes to banks and credit card companies such as Visa and Mastercard. Since the Cash App integration with Square does not use these networks, Square will keep all of the fees.
Now what
Square’s end goal has long been a likely integration between the consumer Cash app and the business-centric Square app. This announcement does just that and it could be the start of Square’s disruption of long-entrenched credit card companies. I’m very bullish on this announcement and on Square’s ecosystem in general, and I think today’s small rebound should have been much bigger, even though investors could have seen the move coming a mile away and half.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.
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