Is Cash App Offering Loans at 260% Interest Rates?
Cash App offers loans up to $600, now at 1 million loans a month
The ubiquitous Cash App has been quietly moving into the small-dollar lending business and is now reporting 1 million active loans a month.
Jason Mikula at Fintech Business Weekly reports on the Cash App credit offering and offers insight into APR and the possibility of more credit offerings by the company.
Mikula cites the quarterly report which indicates:
The product offers customers up to $600 that can be paid back in scheduled installments or as a percentage of what they receive into Cash App. This product has reached meaningful scale while also achieving strong economics: In June, there were more than 1 million monthly actives using Cash App Borrow. We have been focused on driving profitable unit economics, enabled by our discipline around risk management.
A small-dollar loan offered at a seemingly reasonable flat fee of 5% of principal certainly expands access to short-term credit.
Users already have Cash App on their phones, can have both direct deposits and peer-to-peer payments used to repay the loans, and the app is linked to bank accounts, giving the company another avenue to ensure repayment/avoid default.
