While a popular headline today states that Jack Dorsey’s Square had passed his other company Twitter in market cap, and related that with the world of cryptocurrencies, this has most likely nothing to do with it. While it could have influenced the growth in a little way, the truth is that Square did not surpass Twitter just because of cryptocurrencies because the revenue from it has been almost minimal for them, and they have declared that they don’t expect to be making money out of crypto for a long time.
Square Did Not Surpass Twitter Just Because Of Cryptocurrencies
It all started with the post of a tweet from a cryptocurrency analyst Joseph Young, that expressed that “Jack Dorsey’s Bitcoin integrated payment company Square surpassed Twitter (Jack’s other company) in market cap: $30 billion to $25 billion”. While to some it could be a fear comparison, it really is not. First, Square is not a Bitcoin-only integrated payment company, and that is why Square did not surpass Twitter just because of cryptocurrencies.
Square is a financial services, merchant services aggregator, and mobile payment company in California. Its forté is based on mobile credit card terminal and it makes most of its revenue of a fee-based system that collects a percentage of the amount of money paid through their POS systems.
It is just recently in 2017 that Square started integrating cryptocurrency trading through its cash app, but with not much success till now. Twitter, on the other hand, is a microblogging platform that receives its earning due to advertising. while it is one of the most recognized social networks in the world, its business model is different and also its monetization.
Why Square Really Blossomed
Square is a payments company that has grown a lot since the last year, expanding their reach across merchants. But while many could think that its relationship with bitcoin and the cryptocurrency trading world could have influenced in this, the truth is that it is not likely.
In fact, they are making almost no profit in every cryptocurrency trading. According to statements made earlier this year, Square cashed less than one million on revenue directly related with the bitcoin trading app, due to the costs that they face to offer this kind of trading without fees in the platform. Its CFO Sarah Friar said it bluntly: “It’s not a major monetization engine”.
The thing that drives revenue for Square is the fact that they are a payment company and this has been a very good year for payment companies and also for credit cards providers. Even with the latest stock drop, Visa reported record earnings, confirming that this was a good year for payment and credit companies. Summarizing, it pays well to be in the payments industry.