Square credit card readers attached to phones and tablets have made it easy for small businesses to accept payments. Now the company is offering peer-to-peer online payments for businesses through Square Cash.
Square Cash allows businesses to accept debit card payments through a "$Cashtag," which is a handle and web page that individuals or companies can use to make payments. There is no charge for the sender, but the company receiving the cash has to cover a 1.5 percent fee.
The 1.5 percent fee is significantly lower than the two or three percent typically charged by banks for processing credit and debit transactions. Square's credit card readers are already far more affordable than costly credit card readers issued by banks, but they still take 2.75 percent of each transaction.
The lower fee for $Cashtag payments should help attract even more small businesses, like musicians and farmers market sellers.
Each $Cashtag has a unique URL with its own webpage that acts as a virtual cash register for the company. All that's needed to make a payment is the $Cashtag, which can be a username of your choosing, preceded by a dollar sign.
The clever tags will make it simple to add payment details to a business card or short ad in the same way that Twitter handles work. It also allows you to receive payments without giving away personal details like your name or bank information.
The other big advantage over the likes of Venmo is that you don't need to be running the Square Cash app to make the payment — you can do it directly from a webpage, which significantly reduces the entry barriers for new users.
Square Cash launched in 2013 but previously only allowed payments between individuals — in a similar fashion to apps like Venmo. These apps typically don't charge for the service either, but Square's inclusion of businesses enables a workable business model. It looks like a very clever move from Square and we can see $ signs catching on quickly — in the same way that Twitter reinvented the meaning of the hashtag.
For now, Square Cash only takes debit card payments. To set up your own $Cashtag, just download the Android or iOS Square Cash app or visit cash.me.