Block is seeking to position its Afterpay buy now, pay later product as a cash-flow tool, rolling it into Cash App’s debit card as consumers face a U.S. inflation pinch.
Cash App announced an expansion of the BNPL lending earlier this month, letting users convert peer-to-peer payments and those made with its Cash App digital wallet into short-term loans. The company offers a physical and virtual debit card, its Cash App Pay wallet and BNPL loans tied to the debit card.
Cash App says that many of its 59 million active monthly users have incomes from multiple sources, with their pay arriving at irregular intervals and often in varying amounts.
At Cash App, about 70% of monthly users are in a category of employees that include gig workers, freelancers, content creators and solo entrepreneurs, according to the company. Much of this group is denied access to traditional U.S. financial infrastructure, Cash App said.
BNPL rival Affirm Holdings also offers pay-later financing with its debit card and is working to sell its technology to banks and credit unions to use for their own debit cards.
Tanuj Parikh is the North America head of revenue for Cash App and Afterpay, Block’s financial services app and buy now, pay later product, respectively. In a June 17 interview, Parikh discussed Block’s efforts to expand Afterpay’s merchant network and how Cash App aims to offer multiple consumer payment methods.
Editor’s note: This interview has been edited for clarity and brevity.
PAYMENTS DIVE: In terms of someone using your debit card or Afterpay, does Cash App care if they borrow as long as they’re using a company product?
TANUJ PARIKH: We are somewhat agnostic. For us, the same customer might use the (debit) card one day for one purchase, might use Afterpay the next day because it's a bigger-ticket thing, and they want that flexibility, and then they might use Cash App Pay the next day or an hour later on (delivery service) DoorDash, because it's embedded and on file, and it's just the fastest, easiest way for them. We want all three payment methods for that same customer, depending on where they are on their own income cycle, what merchant (site) they’re on, how big the ticket is. We want to be able to be top of wallet, and having multiple ways for them to pay lets us do that.
Does the Cash App and Afterpay demographic overlap as mostly the same customer base, or do you see distinctions?
There’s a good amount of overlap, but there is distinction. Broad strokes, the core Afterpay customer is a little bit older, a little bit more core millennial, a little bit higher income. The Cash App audience is much bigger, so it kind of covers everything, but it tends to be a little bit younger, a little bit lower income.
What’s your view on BNPL’s longer-term growth, and whether it moves into all types of merchants and even into debit cards?
There's a ton of growth possible, both from a merchant network standpoint, and even within our traditional verticals. If you look at our pathways, we’re traditionally strong in fashion and retail, and there's lots of fashion and retail providers who don't have Afterpay, who don’t have any BNPL, so a lot of growth there. And I think there's BNPL flexibility grafted onto new types of products. As you referenced, we added it to the Cash App debit card, where we think it's a really nice way to give credit functionality to a debit-centric audience.
Block has talked about its Cash App credit score as a new product to sell into the credit market. Where does that project stand?
We are working on it; it’s early days still for us. We’re really excited about our ability to underwrite. So we are in the early, early days of bringing that to market and figuring out where it makes sense, and talking to potential partners and providers who would be able to use that.
Where are you most focused for revenue growth across Cash App and Afterpay?
From a revenue standpoint, and the commerce strategy, it is really the merchant network. We think there's a ton of room to grow, both in verticals where we're already strong, and then in new verticals. And some of that depends on both of the different payment products we have, so BNPL on one side has different vertical opportunities to grow. Cash App Pay is a direct digital wallet and so in that space, for example, we’re seeing a ton of success in streaming and digital products, and more everyday spend at QSR (quick service restaurants).
What are your thoughts about retaining customers as they age and earn more?
What we think about a lot is … as they’re moving up the age and income curve, do we have the right set of products to keep them in our ecosystem? We do not offer all kinds of other loans beyond the Cash App short-term loans we offer today or Afterpay. There’s some pretty fundamental shifts happening in how Americans make money, how they manage their money, how they want to spend their money. And we just want to be on the forefront of building the right products to stay with those people over time. We just need to be able to stay ahead of the product suite that serves them.
