Update (Nov. 6, 22:11 UTC): Square confirmed that Cash App is rolling out a new fee structure for bitcoin purchases. Previously, the fees were baked into the spread. The article has been updated.
Jack Dorsey may “love” bitcoin but it looks like Square needs a better margin on it regardless.
Square’s Cash App has started charging standalone fees of as much as 1.76 percent on bitcoin purchases, sources have pointed out to CoinDesk.
The Cash App’s support website now acknowledges fees, writing: “Cash App may charge a fee when you buy or sell bitcoin. If so, the fee will be listed on the trade confirmation before you complete a transaction.”
It is unclear when that language was added but there were no fees associated with bitcoin purchases as recently as September.
According to the Internet Archive, the same “Bitcoin Fees” page said on March 8, 2019: “You are not charged a conversion fee, or any other fees, to buy or sell Bitcoin through the Cash App.”
One screenshot of a purchase page dated Nov. 5 showed a $0.10 fee for a $10 purchase (1 percent). We also saw $0.88 for a $50 purchase (1.76 percent) and $1.75 for a $100 purchase (1.75 percent). It seems that Square rounds down in certain instances.
After publication of this article, a Square spokesperson confirmed that Cash App is rolling out a new fee structure for bitcoin trades. Previously, fees were included in the spread (or the markup on the market price). Now Square says it has broken fees out of the spread for the sake of user transparency.
Additionally, Cash App updated the language on its website clarifying the types of fees it would charge for each transaction (the second fee, it should be noted, is dependent on market volatility): “Cash App charges two kinds of fees for bitcoin transactions: a service fee for each transaction and, depending on market activity, an additional fee determined by price volatility across U.S. exchanges.”
For smaller BTC purchases, the 1.76 percent fee compares favorably with Coinbase. America’s leading crypto exchange has variable fees based on the size of the transaction, with fees starting at $0.99 for any purchase below $10. A $10 transaction on Coinbase incurs a $1.49 fee. At $50 to $200 the fee is $2.99. With a flat 1.49 percent fee for larger purchases, Coinbase becomes a better option above roughly $171, according to our tests.
All those fees certainly add up: Coinbase CEO Brian Armstrong announced last month the company has earned more than $2 billion in transaction fee revenue since launching in 2012.
Square recently announced it would enable purchases of equities in the Cash App, and confirmed to The Verge there would be no fees for stock purchases.
Square processed $125 million in bitcoin sales through its Cash App in the second quarter of 2019, nearly doubling a record first quarter. However, Q2’s bitcoin sales only generated $2 million of gross profit for the company.
Square also had its Q3 earnings call today, again reporting $2 million in profit on $148 million in quarterly bitcoin sales.
Jack Dorsey image via Shutterstock