Square’s cash app, which is used for payment among friends, is testing the ability to buy and sell bitcoin, a benefit that could make bitcoin easy to trade for a huge swath of the population, particularly younger consumers.
Square’s cash app is one of the fastest and easiest ways to pay people, as the service is free and the transaction is completed almost immediate. Square Cash recently surpassed Venmo as the most frequently downloaded financial app on both Android and Apple phones, according to Apptopia, Forbes reported.
Square shares jumped more than 4 percent Wednesday as one Wall Street firm was quick to recommend the stock following this potential development, CNBC reported. Later in the day, it was trading at $40.49, up 1.9 percent.
Square enables sellers to accept card payments and also provides reporting and analytics, next-day settlement and chargeback protection. Square’s point-of-sale software and other services help sellers manage inventory.
Users with access to the bitcoin beta can swipe from the Square cash card page to buy or sell bitcoin, according to TechCrunch . The page shows a balance in both BTC and USD along with bitcoin’s performance over the last day, month or year.
The Square action signals bitcoin trading for mainstream traders. Square CEO Jack Dorsey has cited trading as a key motivator for people interested in profiting from bitcoin, which has been soaring in value.
Dorsey, in a recent interview with The Verge, recalled being asked by numerous people how to buy bitcoin. He said bitcoin could be especially popular with younger people who are using smartphones to make payments to friends.
Dorsey is considering making bitcoin another tool the company offers its merchant customers.
Square added the bitcoin option in response to customer interest, according to a company spokesperson, Forbes reported. The company believes bitcoin can improve participation in the global financial system.
The app does not yet allow users to make payments with bitcoin.
Mrinalini Bhutoria and Paul Condra, Credit Suisse analysts, noted that Square is well positioned to allow cryptocurrency transactions at the point of sale. Credit Suisse nonetheless held a neutral rating on the stock, pricing it at $31, or 22% below its Tuesday closing price.
Also read: Here’s why Square’s bitcoin integration is a big deal
Square users will be able to eventually use bitcoin to pay on Square terminals, Dan Dolev, a Nomura Instinet analyst, told CNBC. Dolev’s buy rating on Square has a target price of $45 because he sees the company disrupting the payments industry and expanding among retailers.
The Credit Suisse analysts said the largest risk to bitcoin is regulations. In addition, Square is exposed to counterparty risk and liquidity risk since it has to source bitcoin by using an exchange or pre-buying it. Nevertheless, the analysts see a lot of upside to bitcoin as cryptocurrencies become more mainstream. They said they see PayPal as being well positioned to provide these services.