Square continues to move into PayPal territory, announcing Monday a new way for users to send money to business and to each other – through “cashtags,” a riff on Twitter “hashtags.”
The company is best known for its card reader that offers local retailers and services the ability to accept credit card payments in person. But it also launched a mobile app in 2013 called Cash that lets users send and request money using a debit card and only a phone number or email address – for free. When recipients enter their debit card number, the money is directly transferred to their bank account.
However, the Square Cash mobile app was designed for individuals. Cashtags bring the service to businesses. Though it still doesn’t match PayPal’s flexibility, it has lower businesses fees and a marketing advantage, especially for businesses on social networking sites.
With the launch of Square’s CashMe.com, users can now create unique cashtags that show people how to pay them. Where Twitter hashtags begin with a pound sign, Square cashtags begin with a dollar sign. (Twitter cofounder Jack Dorsey founded Square.)
As Square explains it, “A $Cashtag is a special name you create that lets you get paid for whatever you do. Show people your $Cashtag in the real world…or even Tweet it out for donations. $Cashtags can easily replace the most ordinary payments…or you can get paid in all sorts of new ways!”
The Square Cash mobile app still allows individuals to send and receive money for free – it has processed over $1 billion in peer-to-peer payments annualized – but now will charge businesses 1.5% to accept funds through cashtags.
When we asked Dorsey last year if Square merchants had any desire for P2P payment features such as those offered by some rivals, he said Square had no interest in storing merchants’ money. “We’re not going to store your money. We’re going to put your money in your bank account as soon quickly as we can. And we’re going to make sure you can utilize that money for your business as quickly as possible, and that our fees are as low as we can get them.” Dorsey accomplishes both those things with cashtags.
Cashtags solves the problem for businesses who didn’t want to share their email address or phone number – they can create a personalized name like $ErinHills or $SunsetPhotography. It also means consumers don’t have to download the app – they can pay from the web at Cash.me.