Фев 10, 2020

How do the P2P Payment Square Cash App works?

The P2P payment system is a money transfer from the sender’s card to the card, phone number, email or the beneficiary’s bank account. Advanced users prefer apps that allow you to make payments in both regular currency and cryptocurrency here and now. After all, cryptocurrency is now very popular, and Bitcoin is a full-fledged payment method.

The most popular payment app is Square Cash from Square Inc. — one of the largest companies in the US market. Today we will analyze in detail how this application works and how hard is to develop a similar app.

What is Square Cash?

Square Cash App is a mobile payment application developed by Square Inc. It helps people quickly accept payments and manage money. It is also one of the easiest ways for modern universal merchants to accept payments via mobile phones. Like most of the products in Square’s portfolio, the Cash app is a simple, technology-oriented platform designed to make life a little easier.

The Square Cash App project began as a service that makes it easy to transfer money to friends, for example, for lunch. Project CEO Jack Dorsey, who also heads Twitter, has repeatedly expressed admiration for blockchain technology and called it “the next big discovery.” So now an app offers debit cards, a wide range of services for digital money transfers, as well as the possibility of trading cryptocurrency.

Benefits of the Square Cash

n 2018 the mobile service became the most popular application in the finance category in the US Google Play store, bypassing PayPal in the number of downloads. Benefits that made the app so popular:

  • The application allows you to send funds using only a phone number or email.
  • Users can buy and sell Bitcoins using their balance in the application.
  • The application is completely secure and uses many levels of protection like a face and fingerprint ID, encryption and PIN.
  • Transactions go through quickly and don’t require long confirmation and receipts. Money comes to the account the very next day.
  • For entrepreneurs, the system saves money on transactions. The Square Cash App charges a flat fee of 2.75%. 
  • Square Cash uses $Cashtag — the unique identifier for all users. This helps to preserve anonymity and email. 
  • The application offers a bonus program for users and their friends.
  • Money transactions are carried out in the application using phones, computers, and even Snapchat.

App security

Payment security is the main quality of a good payment system. The company itself states that Square Cash provides complete security for customer’s data. All information is securely encrypted and stored on servers. At the same time, users don’t have to worry about data even if you use public WI-FI for operations.

The Square Cash App uses the same fraud detection infrastructure and security standards that track Square Point of Sales millions of daily transactions. It also complies with PCI Layer 1 Data Security Level (PCI-DSS).

To make the application safe, Square Cash always:

  • Send a one-time access code every time you log in to your account;
  • Advice to enable the Security Lock option so that a password is required for each payment in the Cash App;
  • Send a notification after each payment;
  • Keep the balance of Bitcoins in an offline system;
  • Protect users from scammers.

If you are planning to develop a similar payment system, you should seriously approach the issue of security. Users are not ready to trust an application that does not provide their data with complete confidentiality. 

To gain customer confidence in security, you can be certified in accordance with the requirements of the payment card industry. Obtaining a certificate will also enhance your reputation and ensure a serious attitude to all your services.

Square Cash monetization model

The basic P2P Cash App service is absolutely free, but the app also needs to make money for development. It receives funds from various user fees and additional services.


The Square Cash App receives 2.75% as a transaction fee for business customers. These are favorable conditions for both customers and application owners because, without special conditions for entrepreneurs, commissions are much larger.

Fast transactions and payments

If the user needs the fastest possible transfer from the Cash App to a bank account, he can speed up the sending by paying an additional 1.5% of the amount. This allows the user to immediately transfer funds to a bank account, rather than waiting for a standard deposit time.

Bitcoin exchange

At the end of 2017, the Square Cash App application allowed customers to use their app balances to buy and sell Bitcoins. This service is free, but as a rule, the difference between the Bitcoin exchanges and individuals pay for Bitcoin is 1-4%. The Cash App takes into account these price differences, thereby generating revenue on exchanges.

For example, the Square Cash App can buy Bitcoin from one user for $9,900 and sell it to another for $10,000, while receiving $100 of income. According to Square’s annual report, in 2018, the app earned $166.5 million in Bitcoins and received $1.7 million.

How much does it cost to build an app like Square Cash?

This is perhaps the most interesting question for anyone who decides to make applications. On average, the total cost of developing an application such as Square Cash varies from $20,000 to $150,000. It is difficult to give the exact amount for the development of a payment application because the cost depends on many factors. The most important features that affect the total cost:

  • App unlock view (fingerprint or security code);
  • Linking bank accounts to the application;
  • A bonus system, inviting friends;
  • The number of transaction channels between users;
  • Payment by cards on online sites;
  • Customer support.

Development location and team size also play a role in development costs. The cost also depends on the functions and third-party APIs that you want to implement in the application.

Development difficulties

Although the design and development of the application is not the most difficult part of creating a payment application. For an app like Square Cash, you need a lot of resources and experience. Security issues, currency conversions, and regional and geographic restrictions may occur. Any payment app must comply with the financial norms and standards of the region for which it is developed. And the system of P2P is no exception.

In the US regions, it is quite difficult to formalize everything from a legal point of view. The fact is that there are more than eight federal agencies involved in regulatory compliance. Moreover, there are fifty states in the USA, and each state has its own financial rules. Therefore, you should consider this if your market is the US.

If you create an application for the Asian sector, you need to get approval from the People’s Bank of China (PBOC) Committee for the Chinese market and the Financial Services Center (FSC) if your market is Korea.

The rules of the European Union regarding P2P payment applications are specifically described in Directive (EU) 2015/2366. In addition, all applications that process the personal data of EU citizens must comply with the GDPR rules.

To release the application for the Australian market, you will need to resolve legal issues with the Australian Securities and Investments Commission (ASIC) Innovation Hub.

So is it worth to make a P2P app?

Now you know what work moments need special attention when developing a P2P application. Weigh all the benefits and challenges of creating a Square Cash-like service before you get started. And if you are ready to provide users with a quality app that will change their life for the better and not be afraid of difficulties on the way — bravely create your start-up.