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With the increasing awareness of crypto, more mainstream payment companies are tapping into crypto. In this article, I will look at three payment Apps: Cash App, Revolut and Circle Pay. We will see what features are available, licenses they got and what are their next steps. If you ask why looking into traditional payment apps, why not research what companies are directly using crypto for payment? The most obvious reason is the scale of users. Traditional payment apps like Cash App have millions of users where crypto payment companies struggle with tens of thousands if they are lucky. It’s important to learn what traditional payment companies are thinking and how they react to crypto.

With the increasing awareness of crypto, more mainstream payment companies are tapping into crypto. In this article, I will look at three payment Apps: Cash App, Revolut and Circle Pay. We will see what features are available, licenses they got and what are their next steps.

If you ask why looking into traditional payment apps, why not research what companies are directly using crypto for payment? The most obvious reason is the scale of users. Traditional payment apps like Cash App have millions of users where crypto payment companies struggle with tens of thousands if they are lucky. It’s important to learn what traditional payment companies are thinking and how they react to crypto.

Cash App is the top ranking app in the US iOS app store under the “Finance” category, with 7 million active users in December 2017. It’s also available in the UK. Cash App is developed by the payment giant Square. Users can deposit, send and receive funds(USD or GBP), get a prepaid card or a debit card, and spend the card anywhere Visa debit cards are accepted

Cash App has been compared mostly to Venmo for their overlapped functionalities. One feature that makes Cash App stand out is that users from all 50 states in the US can buy and buy & sell bitcoin in the app. Cash App facilitates direct buy and sell of bitcoin. Some other payment companies facilitate such trade by involving a third party liquidity provider, which we will mention later in this article. Users can hold the bitcoin in their Cash App, transfer it to another Cash App user or transfer externally, which means each Cash App already has a bitcoin wallet. But it does not allow direct bitcoin deposit yet.

What could be the next stops for Cash App in terms of crypto payment? According to Wikipedia, its mother company’s business scope expands as follows, “including Square Contactless and Chip Reader, Square Stand, Square Register and Square Magstripe Reader, and has expanded into small business services such as Square Capital, a financing program, Cash App, a person-to-person payments service, Appointments, Gift Cards/eGift Cards, Invoices, Virtual Terminal, Marketing, Loyalty, Employee Management, and Square Payroll.” It is massive and seems to include every single use case we can think of that’s connected to payment.

To understand Cash App’s next move, we will first need to look at Jack Dorsey’s vision of Bitcoin as the native currency of the internet. Jack, among his many hats, is the co-founder of Square, co-founder of Twitter, and also an investor of Lightning Lab. Jack said, ultimately they wanted to “make the currency aspect of Bitcoin happen and help the internet get to a native global currency.”

It is exciting to see a public company the size of Square to be an open advocate of Bitcoin. But it’s safe to say Cash App is unlikely to list any other crypto tokens any time soon because Jack is a big bitcoin maximalist.

Compliance-wise, since they are incorporated in the US and offer virtual currency services, in addition to banking related licensing, Square is also registered under FinCEN as Money Service Business Money transmitter and Provider of prepaid access. It has also received BitLicense from NYDFS in June 2018, which is required for virtual currency transmission for financial purposes or exchange services both involving the state of New York or a New York resident.

Revolut

Revolut is likely the UK version of Cash App. Ranking 11 under Finance category in the UK App Store, boasting 1.5 million registered users in 2018.

Feature-wise Revolut is highly differentiated to Cash App. As Cash App focuses more on the daily retail consumer use case, Revolut focuses more on cross-border transfer.

One feature that both Cash App and Revolut have is that they both offer crypto trading in the app. But the features are quite different.

Revolut offers the easiest ways to buy crypto in the EU/UK from 20+ fiat currencies for the 5 cryptos and vice versa. It uses Coinbase and Bitstamp to facilitate the buy and sell of five cryptos. Users can neither deposit cryptos from outside nor transfer cryptos externally. Users can buy cryptos, and transfer cryptos internally. When cryptos are transferred internally it is first converted to fiat.

As you can see, what users can do with the cryptos in Revolut is limited. However, Revolut is hiring a Head of Crypto Product from about 2 months ago. They are looking for someone to be responsible for defining and executing on new features as well as new assets. According to the job description, “the existing product was built in record time by one of our core teams and now we are looking to staff crypto on it’s own.” It’s surprising to know that they had no crypto product team beforehand. But it’s exciting to see what new features they will bring next. Crypto assets easily fit into the cross-border transfer business scope. I expect great things from them.

Compliance-wise, cryptocurrencies are unregulated in the UK, so Revolut just follows general financial compliance related to e-banking. Revolut has received the e-money license from FCA, which gives them permission to issue electronic money (e-money) and provide payment services in Europe Economic Areas which includes 30 member countries.

Circle Pay

Circle Pay is another leading payment app available in the US, UK, and some EU countries, ranking 98 in the US App Store under Finance, with 20.7K ratings on ios store and 11,166 ratings on Google Play, which is considerably less than the other two payment apps. Nonetheless, ‘Circle’, the company behind the app, is worth noticing.

Founded in 2013, Circle was the first company to receive the BitLicense issued from the New York State Department of Financial Services in 2015. Circle originally operated both fiat transactions business and bitcoin exchange till 2016. In 2016 they decided to stop the bitcoin exchange business and “focus resources on global social payments and future next-generation blockchain technology.”

With that vision in mind, Circle has expanded into a wide range of business, including its payment products Circle Pay, Circle Invest, and Circle Trade, and its acquired crypto exchange Polonies and USDC, a stable coin pegged to USD. Circle also recently announced the acquisition of SeedInvest, an alternative trading system licensed under FINRA.

Compared to Venmo, which is payment plus social networking accessible to US users, Circle Pay focuses on cross border payment with a slight touch on social networking. Users can use Circle Pay in 29 countries to pay each other in US dollars, British pounds, and euro. They no longer offer the ability to buy and sell Bitcoin on Circle Pay.

It certainly reduces regulatory friction when they separate fiat payment services and crypto exchange services. With Circle Invest, Circle Trade, Poloniex and USDC, Circle is quoted to be the biggest rival of Coinbase, a mainstream crypto exchange with over 20 million users.

Note here, although it was Circle who launched CENTER USDC, both Circle and Coinbase are founding members of the CENTER consortium which will oversee the rules for the issuance and redemption of USDC. Circle’s strong partnership with other industry leaders definitely shows its muscle.

License wise, Circle has acquired Money Service License and Money Transmitter License in many states in the US. It also has obtained Bitlicense from NYSDFS. For its financial services in the UK and EEA, Circle has obtained an E-Money License issued by UK FCA.

Takeaway

Payment is the most immediate use case for crypto. I personally don’t think Cash App’s Bitcoin maximalist approach is the best. Revolut’s limited exposure of crypto to users is only a good add-on. And since they only hired a crypto head two months ago, it seems they are one step behind the other two in terms of crypto product development. But with their large user base, it’s also exciting to see what they will bring us next.

What Circle does is most interesting to me. It finds the pain spot of cross-border payment where crypto can help solve the problem perfectly. And by separating fiat payment to its crypto business, it reduces lots of regulatory friction for the time being. A fiat payment app, a full range of crypto investment and exchange apps for both professional traders and everyday consumers, plus a stablecoin, is definitely a winning combo to me.

In general, it’s exciting to see mainstream payment giants tapping into crypto. They are shaping the future of payment.

The next article will be about more crypto payment projects including Wirex, Crypto.com and some other emerging payment projects. Stay tuned.