Mercator Blog

Square Cash—P2P So Simple, Bankers Beware!
Date: November 20, 2013
Research Team

During the week of October 17, 2013, Square introduced a new person-to-person (P2P) money transfer app called Square Cash. The industry chatter had people calling the app “clean, simple, easy to use, free”. . . obviously a game changer. It was hard to believe how positive the response was. Now, a month later, the hype has died down. The question was, Could the app stand the test not only by another industry analyst (me) but also by his college student offspring (mine)? So last Sunday night I launched my own test.

I sent the Square Cash email notification to the kids late Sunday evening via an outbound email to their emails, copying and typing the dollar amount to be transferred as the Subject. I included a note describing what the email was about and asking my kids three questions: How quick is the process? What is the experience like (say compared to Venmo)? And would you use it again, next time with friends? Finally, I downloaded the Square Cash application from the iTunes store and tried sending cash using the application on my iPhone.

First, my take: Wow! Clean, simple, easy to use, intuitive, and really at NO COST! I am sounding like the other reviewers in the industry but with additional pats on Square’s back. At every turn my experience was positive. I found the interface for the service incredibly clean and familiar since it was based on my own email. It is simple to use with just three entries required on the email. To test an alternative mode of use, I downloaded the Square Cash app for my iPhone (as you can do on your Android phone). I clicked on “Attach to Email,” typed in the dollars to be transferred, and the application dropped me into my email, where I just entered my kids’ email addresses to send the money.

Truthfully, my biggest and only personal complaint involves a bit of a security fear. Square Cash has taken great effort to assure the app’s users that Square has security under control, but I’d probably ask the service to take a final step and guarantee my funds. If any funds are transferred from my account by Square, I’d ask the company to guarantee to replace those funds if I didn’t approve the transfer. I know the service is free, but all that it would take would be a couple of problems arising and the service could collapse as consumers (and I) run for the hills.

Finally, I heard back from my kids about the P2P money transfer. Other than the elation of receiving money without having asked for it, I heard the following…

  • On one hand the app was really simple. It took them only seconds to complete the money transfer to their debit accounts.

  • But, my son said that when the email arrived, it initially felt like spam and: “It didn’t feel like it was real until you explained it to me.” 

  • If I hadn’t followed up immediately with a text saying the email was legit, he said he probably would have ignored the P2P transfer email. It had seemed to him that this message was what someone trying to commit fraud would do to get his debit card number, expiration date, and zip code. (Square Cash should probably add something to the process to make it a little more formal and serious.)

  • He also said the app didn’t feel secure: What if someone got his phone and gained access to the email capability or the cash app? Shouldn’t the cash app have a separate ID and password on it?

  • All in all, he said he’d use the app again, but he didn’t know how quickly his friends would take to it. 

  • My daughter, on the other hand, said the app was almost too simple. She almost forgot to cc: She preferred the Square interface to enter her debit card number, expiration date, and zip code to those of Venmo.

  • She wasn’t sold on the app compared to Venmo, though. All her college friends use Venmo, which is the standard P2P money transfer mechanism at her university. Any money transfer app she ends up wanting to use, her friends must also use or it’s worthless. 

  • Two pluses for Square Cash: It seems as easy to use as Venmo and maybe a little safer since it does a “confirm request” and Venmo doesn’t.

Perhaps the comment that hurt the worst was, “Gee, Dad, it almost seems like Square Cash was made for older people using email and Venmo was made for younger people using our mobile numbers.” I’m “older people”? I wonder if the lack of friction that makes the app natural for me to use makes it seem a little dated for the next generation. No matter how you look at it, the battle is heating up in P2P and we haven’t seen the clear winner yet. For those banks stepping into the P2P fray, new, easy options are out there and the competition is not “old-school.” Stay tuned.