Square’s Cash app is beta testing a new feature where users can borrow $20 to $200, the loan length is four weeks and cash app is charging a flat fee of 5% (multiplied by 52 weeks is 60% or almost 80% with compounding interest). Currently this feature is being offered by 1,000 users.
Obviously Cash app will position this as a cheaper alternative to a payday loan, but when your ‘competitive’ advantage is to be cheaper than the most expensive loans in existence I’m not sure that’s a selling point. It’s disappointing as cash app has been doing good things such as the cash app boosts. Even credit card issuers that offer to turn your credit card into a personal loan don’t charge rates as high as cash app.
Hat tip to TechCrunchÂ
