Square Cash gets physical with companion prepaid card

Square Cash gets physical with companion prepaid card

Square Inc has begun rolling out a physical plastic card for use with the company’s Square Cash P2P money transfer service. This move could help differentiate the service from its competitors by making it easier for users to instantly spend funds they receive via transfer, writes Paybefore (Banking Technology‘s sister publication).

Last week, Square began sending notifications to some Square Cash customers, offering the chance to sign up for a physical Visa debit card linked to users’ Square Cash accounts.

Because it’s directly linked to Square Cash balances, the physical card enables users to instantly spend Square Cash funds at merchants. The P2P service typically requires users to wait a day to transfer balance funds to bank accounts, or pay a 1% fee for instant transfers.

Last year, Square Cash launched a virtual prepaid card that offers similar functionality, but requires integration with Apple Pay. The new plastic card enables Square Cash funds to be spent instantly at merchants that don’t accept Apple Pay, or by users who don’t have iPhones.

Along with making it easier for users to spend Square Cash funds, the physical card also could make it easier for Square’s small merchant customers to manage their businesses, notes Ben Jackson, director of the prepaid advisory service at Mercator Advisory Group.

“A Square user running a small business might see the card as a way to take in funds and use them for expenses” – especially if Square integrates an expense tracking function, Jackson tells Paybefore. “For example, a car service using Square might want the card for gassing up, and if Square can help manage the reporting, then there is a value add that might be competitive with other cards.” The ultimate success of the card will come down to execution, Jackson notes.

The plastic card provides Square with the opportunity to create a powerful symbiosis by encouraging users to spend Square Cash funds at merchants that use Square’s mobile card reader, enabling the company to earn revenue from both sides of the transaction.

The card also could help Square deepen its relationship with its customers – which could prove useful if the company decides to expand its existing small business lending service into consumer loans.