The CEO made the statement about the company seeking a more varied Cash App user base in response to a question from a JPMorgan analyst about investor perceptions of Block being “over-indexed” to lower-income consumers. Supplementing the mobile app’s services could help build out its base, Dorsey said.

“It’s really up to us to continue to find those adjacencies in the financial space,” he said during a webcast of the conference appearance in Boston.

Cash App had about 53 million monthly active users as of March, according to Block’s first-quarter shareholder letter. During the first-quarter earnings call, Dorsey noted the recent addition of Cash App’s savings feature, and said the company aims to keep adding adjacent financial services to cultivate a banking-type relationship with users.

On Tuesday, Dorsey said he envisions Cash App’s simplicity appealing to older, higher-income users, as well as the features that allow them to give their child a card and then control its use.

Cash App opened its services to teens in 2021, and rival Venmo announced Monday it was launching a peer-to-peer account tailored to teens. Venmo’s customer base skews younger, just as Cash App’s does, but PayPal Senior Vice President Doug Bland has said Venmo’s customers tend to be higher income. 

Lower-income consumers in the U.S. are most likely to use Cash App, of the available payment apps, Pew Research Center has said. Last year, the share of lower-income consumers using Cash App (36%) was twice the share of upper income consumers using the app (18%), according to data released last September from Pew Research Center. 

By age group, nearly 40% of 18- to -29-year-olds and more than one-third of 30- to 49-year-olds used Cash App, compared to 19% of 50- to 64-year-olds and 9% of those 65 and older who used it, Pew discovered. Block spokespeople didn’t immediately respond to an inquiry about the demographics of Cash App’s user base.

The short-selling Hindenburg Research firm issued a negative report on Block in March, unleashing a slew of allegations against the business, including about Cash App. Block called the report “factually inaccurate and misleading,” and defended its account measurement tactics and compliance policies. Earlier this month, Block said it planned to boost compliance spending this year to $160 million. 

On Block’s merchant side of the business, which counts processor Fiserv’s Clover and restaurant fintech Toast among competitors, Dorsey acknowledged that Square is coming to terms with the fact that it has historically shied away from typical sales practices while focusing on technology to serve small businesses.

“Our competitors have seen that, and definitely take advantage of the fact that we have a gap specifically in outbound sales,” Dorsey said at the bank’s global technology, media and communications conference. “And we’re figuring out more of a balance there, and not being so stubborn about being technology-first and -focused.”

Square is now trying to strike more of a balance between the two, in a way that isn’t “predatory,” he said, referencing rivals that may be locking sellers into contracts.

After getting its start with very small businesses, Square has set its sights on larger businesses to fuel growth. 

Square identifies its large business customers as those generating more than $500,000 in annualized gross payment volume, while its mid-sized clients generate between $125,000 and $500,000 in annualized GPV, and its small sellers generate less than $125,000. Its large business customers made up 38% of Square’s merchant base in the first quarter, Block said in its shareholder letter. 

Amid a competitive landscape in point-of-sale and merchant services, “we certainly need to do better at getting our foot in the door, but once people are in, we have a lot of love and a lot of resilience in our relationships,” Dorsey said.

Dorsey also mentioned Block’s TBD business, an open developer platform focused on decentralized finance, during the conference presentation. That business is targeting the global remittance space by using bitcoin as a money transmission protocol, he said.

By Caitlin Mullen on May 24, 2023
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