Jack Dorsey’s fintech company Block (SQ), formerly known as Square, is linking together two of its biggest platforms, merchant services system Square and peer-to-peer payments app Cash App, to give retail stores the ability to automatically convert a portion of their daily sales into bitcoin (BTC), according to an announcement on Wednesday.
The tool, called Bitcoin Conversions, will set eligible Square users up with a dedicated Cash App account programmed to receive 1% to 10% of their store’s revenues, which will then be converted on their behalf into BTC, which can then be held, sold or transferred “as they see fit.” The service will be limited to sole proprietors or single member LLCs until a full rollout to Square customers in the coming months.
Block reportedly carried out market research by surveying Square sellers and found that there is demand for a product like Bitcoin Conversions. Many merchants “are interested in bitcoin and believe it presents a wide range of use cases, such as long term savings and diversifying their businesses’ holdings,” the company’s press release says.
“Many sellers have told us they want an easy way to access bitcoin and diversify their holdings, so we tapped into Block’s ecosystem to deliver a solution for them. Bitcoin Conversions automates the process for sellers while still giving them flexibility and control over how they manage their bitcoin,” Bitcoin Product Lead at Cash App Michael Rihani told CoinDesk in an email.
It also presents a potentially lucrative financial service for Block, depending on how many merchants sign up and how much capital is converted per day. At launch, the new service will charge a flat 1% conversion fee – lower than the 2.25% fee Cash App charges for most retail purchases of bitcoin – but still an extra 1% Block can earn on top of existing processing fees.
Cash App, one of the most popular ways to onboard users into the bitcoin economy, appears to be emerging as the hub of Block’s Bitcoin-focused efforts. Last month, the company began shipping out pre-orders of its proprietary, non-custodial Bitkey bitcoin wallet, which is connected to Cash App to provide “seamless” BTC purchases and transfers.
Block earned a total profit of $1.18 billion on its Cash App business last year, up 25% year over year, including non-bitcoin sales, while Square generated a gross profit of $828 million. The company held approximately 8,038 BTC (worth $531 million at today’s prices) as of the end of December.
