Square adds a new feature to its Cash app that supports direct deposits for your paycheck, according to a report published in TechCrunch on March 8, 2018.
Every new feature added to Cash app makes it like an actual bank account to the users. This feature by Square allow users to put their paycheck or any deposits directly into their Cash app balance. Once the user accepts a disclosure, they are provided with an account number and routing number, which is the only requirement to start making direct deposits. When the deposits are credited to the users Cash app balance, they get a notification. They can then send the money to a friend, spent using a debit card or use to buy bitcoin.
By combining this feature with the debit card of Cash app, all the basic functions of a bank account are available to the users. In the near future, instead of using a traditional bank account, young users of Cash app might use this direct deposit feature when they start a new job. People who live in underbanked communities will also benefitted by this new feature.
Square does not have a bank charter and to build features such as debit card and direct deposits, they had to partner with other banks. Sutton Bank issued their debit card and Lincoln Savings Bank sponsored their direct deposit feature. Also, routing number and an account number are given to the Cash app users by this bank. Since it is difficult to get a company’s own bank charter, such partnerships between FinTech companies and FDIC-insured banks are necessary.
Apps like these will lead to an increase in consumer confidence towards online hyperlocal services, thereby increasing the growth of global online hyperlocal services market, as elaborated in the Global Online Hyperlocal Services Market report published by Coherent Market Insights.