Smart. Very Smart.
I applaud Square’s introduction of “$Cashtags” for a number of reasons.
First, some of you may know that I am a bit of a nut when it comes to brand names in payments – I think it is incredibly important that the sending and receiving party both know/understand the word being used for the payment. This can be a generic (“small b”) brand – “Do you take checks?” or a “big B” brand – “I’ll pay you with AmEx”. But both parties need to understand the term! This is a surprisingly important barrier to entry for payments startups.
So Square is expanding their Cash service to support merchant payments. By defining a term $Cashtag, they are giving the world a word that both parties will get – brilliantly piggybacking on the worldwide understanding of the term “hashtag”. And the idea of letting the receiver of payment claim their own “pay me” code, and publicize this – should have immediate and visceral appeal. Why isn’t my bank doing this? Where is my “Bankpay” tag?
Secondly, you really have to admire Square for being willing to cannibalize itself. A small merchant claiming a $Cashtag may prefer this to accepting a card with their Square dongle. You can argue about the relative economics for Square of the two transactions, but the more important point, in my opinion, is that Square isn’t falling victim to its own success, but rather embracing new methods of letting merchant get paid.
Smart. Very smart.
This post was written by Glenbrook’s Carol Coye Benson.
As a founding partner of Glenbrook, Carol has offered clients over 25 years of experience in product, marketing, and strategy development with leading financial services providers in both wholesale and retail financial services. She is a co-author of the book “Payments Systems in the U.S.” Before founding Glenbrook Partners, Carol was a managing director of the Global Institutional Services division of Deutsche Bank, in charge of marketing, client online services, and Internet development.
Carol began her career as a corporate lending officer for large multinationals at both Bank of America and Citibank. During her time at Visa International, Carol founded and managed Visa’s European product-development office, where she led a series of electronic-commerce and chip-card projects designed to bring European banks online. Carol formally retired from Glenbrook in June 2020, but remains important to the firm as both a friend and advisor.