Block Says Goal of Cash App Is To Be Primary Bank

With a roster of 49 million active users and a record $52 billion of inflows — including a spike in direct deposits — Cash App is looking more and more like a major, multi-featured, traditional bank these days than the mobile peer-to-peer payments system it started out as nearly 10 years ago.

And for Block co-founder and chairman Jack Dorsey, that transformation is exactly what he wants.

“We don’t have the data on whether we’re primarily [competing] against other credit cards or other banks, but that is certainly our goal,” Dorsey told analysts and investors on the company’s defiantly strong third quarter earnings Thursday (Nov. 3), pointing to the service’s combined payment, card, savings and commerce offerings.

“Over time, we want to work towards being primary because everything that you need in your financial life you can find within Cash App Card,” he added. “So that’s the goal, that’s what we’re focused on, and I think we have the best strategy to get there.”

As it stands, Block’s Cash App Card is the typical consumer entry point to the FinTech’s growing ecosystem of services, which is now also seeing meaningful contributions from Afterpay, the BNPL provider it acquired last year for $29 billion.

“People come in for various different reasons, and they will find our other services,” Dorsey said of the brand’s classic cross-sell approach.

Based on the fact that Cash App generated $774 million in gross profit in the three months ending September 30th — marking a 51% increase from a year ago during a time of growing economic and consumer distress — it’s fair to say that Block’s new baby, so to speak, is growing up.

“We believe driving inflows per active [user] starts with customers’ ability to easily fund their Cash App accounts through a variety of channels,” CFO Amrita Ahuja said on the webcast, before describing the unit’s march to the mainstream.

“Together, direct deposit and paper money deposits have made up a growing share of overall inflows reaching 14% of inflows in the third quarter, up from 9% a year ago,” she added, noting direct deposit milestones of more than $2 billion in September and nearly $3.5 billion in cumulative cash deposits only a year since launch.

Fair and Square

At the same time, Square — Block’s original namesake point of sale product — is on a march of its own, following a similar beat of simplicity and cohesion as its consumer-facing sister.

“We realize there are some significant challenges all businesses are facing today,” Dorsey said. “So giving sellers simple and intuitive tools to remove complexity from running their business is critical,” he added, pointing to Square’s three-pronged focus of enabling omnichannel capabilities, growing upmarket and expanding internationally.

“We’re building multiple ecosystems to serve different audiences,” Dorsey said. “Square for sellers, Cash App for consumers, Tidal for musicians and TBD for developers. But what makes Block unique is our ability to connect all of these together.”