Square Analyst Sees Market Share Opportunity With Direct Deposit

What Happened: Square Inc SQ could take as much as 20% of future market share due to the platform's speed when it comes to direct deposits, SunTrust Robinson Humphrey analyst Andrew Jeffrey said in a note earlier this week. 

Square has reportedly added over 11 million direct deposit accounts in recent months due to the coronavirus pandemic.

In March, the company obtained federal and state approval for an industrial loan charter in Utah.

Why It’s Important: CEO Jack Dorsey has been pushing the direct deposit feature and offered the platform — in a tweet — to assist the government with direct depositing stimulus checks. 

With an estimated 55 million Americans living without bank accounts, this feature could be useful to a large number of individuals.

With the federal government announcing a shortage of physical currency, having access to an online platform is timely indeed. 

What’s Next: Watch Cashapp and peer-to-peer transactions. Cashapp is owned by Square and has been adding features to compete with other services such as Venmo and has been seeing increased usage in the last few months.

Square, has promised to waive business fees during the pandemic and has been discounting physical hardware fees.

Will growth continue when these fees are no longer waived? 

Photo courtesy of Square.