Over the years, consumers and businesses have both been migrating towards an increasingly digital payments ecosystem. This was only accelerated by the COVID-19 pandemic.
According to a report by Square (SQ), the share of cash transactions across their seller base in the U.S. decreased to 33% in late 2020, down from 37% pre-COVID.
Moving Toward A Cashless Society
On the consumer side, Cash App and Venmo have become widely adopted. What began as peer-to-peer payment apps have evolved to become fully digital banking solutions. Today, users can send and receive money, invest in stocks, and even borrow money.
Cash App today boosts over 36 million users (up 50% year-over-year). For context, incumbent banks like Wells Fargo have 32 million digital active customers, and 26 million of which are mobile active users.
Changes are also happening on the merchant side as many platforms build out payment layers themselves. Companies like Shopify (SHOP) provide loans to their merchants through Shopify Capital, alongside many other tools to help drive conversion rates. As innovation continues to take place, legacy businesses will be disrupted and new ones will rise to the top.
The author or his firm have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.