How about sending cash just by sending an e-mail? That's the idea behind a new online payments service called Square Cash, which began rolling out this week.
The service is free and requires no sign-up. To use, a person writes an e-mail, copies the company Square, and specifies the dollar amount in the subject line. The message body can be left blank or can include a message.
Once the e-mail is sent, Square will reply to the sender asking for permission to link their debit card to the payment, which they can do by simply replying with their debit card number once. Square verifies that the debit card account exists and sufficient cash is present, before sending an e-mail to the recipient. The company said it does not track the total funds in the account.
Up to $2,500
The recipient of the funds receives an e-mailed link from Square and is asked to reply to Square with his or her debit card number to receive the funds, also just the first time. There is no intermediate stored balance account, and the transaction takes a day or two, although Square says sometimes the funds show up right away. The sender and recipient are now both authorized to send or receive funds, in either direction.
Square says the actual financial transaction is communicated securely. Any e-mail service can be used, including Yahoo, Gmail or Outlook, on any device. There's also a Square Cash app for iOS and Android devices, for sending e-mail payments directly.
Initially, individuals are being targeted in this person-to-person version, but the company said it may someday offer a business-focused version. Up to $2,500 can be sent each week, debit cards need to be either Visa or MasterCard, and the service only works in the U.S. The simple verification service described above is good only for up to $250 weekly. For additional amounts, up to $2,500 total, Square requires you provide other information once, such as the last four digits of your Social Security number with name and birthdate.
Without Hoop Jumping
Square says it eventually will make money by offering premium options, such as a fee for use of Square Cash internationally.
Square Cash's Brian Grassadonia said in a statement that Square's philosophy is to create solutions "for individuals and businesses that work with the tools they already have in their pocket." He added that sending money can now be done without making recipients "jump through hoops to retrieve it."
Other digital services also allow person-to-person payments, such as PayPal. But PayPal requires a PayPal account, which is linked to a bank account, and then separate steps to transfer the PayPal funds to the bank account. According to a July report from industry research firm eMarketer, payments are expected to reach $1 billion this year and balloon to $58 billion by 2017.
One question is whether Square has enough of a trust factor for users to send their debit card information via e-mail, particularly given how much we have been trained to be wary of scams. The company, which is known primarily for its inexpensive point-of-sale solutions for mobile phones and tablets, is known among some small-business owners and some e-commerce watchers, but is not exactly a household name.
Square makes a free credit card reader for iPhone, iPad and Android devices. Businesses can use the Square Register app with the reader to accept credit cards on most mobile devices, for which they are charged a fee of 2.75 percent per swipe or a flat $275 monthly.