​Who Do You Trust: Square's Cash App vs. Paypal's Venmo

Stephen L Kanaval  |


With a meteoric rise, the total downloads of Square's SQ popular Cash app just surpassed Paypal's PYPL Venmo.

Looking at the numbers, Jack Dorsey's money transfer app hit 33.5 million recently passing Venmo's 32.9 million. Square has more than doubled its share price since the start of the year, while Paypal has redesigned its flagship hitting all-time highs on Wall Street.

Looking at the Companies Behind the Apps

Recently, Square Inc, got a solid boost from a Guggenheim report predicting even more upside ahead for the Cash app as they unlock underbanked sectors (specifically Jeff Cantwell called the stock "the best idea in fintech" and raised the price target to $100).

"We think Cash App will eventually expand into areas like consumer finance, investing, and cross-border money transfer, driving sustained high rates of revenue growth for Square," Cantwell wrote.

Over the last few months, Square has also transformed into a cryptocurrency play as the Cash app now allows bitcoin purchasing in all 50 states. The company reported it generated more than $70 million in bitcoin-related activity for the first half of 2018, and this was during a rather bearish season for the premier cryptocurrency. To strengthen and add legitimacy to their bitcoin service, Square also switched from a public exchange to a private OTC desk, which will reduce user fees and beef-up security.

“Our customers have shown interest in a simple, approachable way to buy and sell Bitcoin," the company said in February. "Through our pilot, we’ve learned a great deal about how we can make this experience faster and easier and we’re excited to expand its availability."

As mentioned above, Paypal is no slouch boasting an impressive 244 million registered accounts and Venmo saw 600,000 new users join in the second quarter.

"PayPal core business trends are showing impressive growth. We believe that PayPal is in a unique position in the payment ecosystem with a strong and growing set of direct relationships with a large number of both consumers and merchants," an analyst from Jefferies Financial Group said this month. "We expect PayPal to continue to outpace broader e-commerce industry volume growth rates given PayPal's broad consumer base and extensive merchant footprint."

Taking a bird's eye view, shares of the stock are up 165% over the last three years which outpaces the industry handily, but competition from Square has cooled the stock off slightly.

Which is the Money App to Rule Them All?

So, with Venmo and the Cash app both at peak performance, which one is actually the best money transfer option?

Both companies offer instantaneous transfers, but a notable difference starts at the sign-up process. Venmo requires users to link their bank account, while the Cash app only asks users to link their debit card. The former caters more toward those with established bank accounts and even adds a social aspect in the form of a newsfeed-like page detailing the transactions of your friends and the wider Venmo community.

This last feature has come under some scrutiny recently as most users were unaware that their transactions were public and circles of friends are surprisingly using the records to keep tabs on each other. In fact, some websites like Vicemo collect and publish illicit Venmo transactions. In contrast, the Cash app allows for easy anonymous payment by using the $Cashtag feature, a unique screen name each user creates.

In regard to business models, Venmo and the Cash app are more or less identical. Thus, what it seems to come down to is what kind of spender a user wants to be either anonymous or social.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
PYPL PayPal Holdings Inc. 90.62 0.02 0.02 25,379,398 Trade
SQ Square Inc. Class A 85.30 -1.21 -1.40 10,113,956 Trade

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