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Jack Dorsey wants Wall Street to know that Square Cash can be a real business

Yes, it can generate some revenue.

Thurgood Marshall College Fund 28th Annual Awards Gala
Square (and Twitter) CEO Jack Dorsey
Teresa Kroeger/Getty Images for Thurgood Marshall College Fund
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

For years, Square Cash felt more side project than strategic for Square, Jack Dorsey’s payments and small-business services company.

But, now, the service is starting to generate some revenue and the company wants the world — or at least Wall Street — to know.

In its second-quarter earnings report today, the company for the first time gave some indication of the business that Square Cash is driving — albeit a very high-level indication.

Money-transfer apps like Venmo and Square Cash are typically free to use, as long as you are connecting your debit card to the account instead of your credit card.

But in the second quarter, “more than a third of active Square Cash customers conducted a fee-based transaction,” the company said. Translation: Square generated some revenue from more than one out of three Square Cash users.

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How? From the start, Square has charged a fee for people who fund their money transfers off of a credit card. But most people don’t do that.

So Square has added other features. There’s a service for business owners to take customer payments through the app — it originally cost 1.5 percent per transaction, but now costs 2.75 percent.

Square also now charges a 1 percent fee if a Square Cash user wants instant access to funds sent to them through the service. Otherwise, they have to typically wait a day to cash out new money to a bank account.

Square Cash card
Square Cash card

Most recently, Square started offering its own pre-paid debit cards — Cash cards — that allow people to buy stuff online or in stores using funds stored in their Square Cash account. This is another way to let people spend money received through the app instantly without having to wait for it to clear to a bank account.

CEO Jack Dorsey said on a call with analysts that the cards have been popular with people who “may not have a bank account or may not have a full suite of services from a bank.”

As with any payment card, Square earns a small fee from merchants every time a customer buys something with a Cash card.

I’m sure it’s no coincidence that Square chose the quarter in which it started sending out the Cash cards to customers as the quarter to comment on Square Cash-related revenue. What do you do right away when you get something new? Use it. There’s a very good chance that a good chunk of the fee-based transactions Square highlighted in the quarter came from people using the new Square Cash card for the first time.

So the next few quarters will be a bigger test. If people keep using these cards, Square Cash may have itself a business. If the company stops disclosing this information, on the other hand, we’ll know it was more of an artificial bump from the excitement of a new product launch.

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