The COVID-19 pandemic has led to an increase in streaming, data usage, and voice calling. And now that many states are reopening, contactless payment has never been more valuable, as people are avoiding the use of cash to cut down on what they touch in public. As a result, contactless payment service Square is now valued at a level equal to many large banks in the US.
After nearly bottoming out in March and April thanks to the onset of quarantine, Square’s market capitalization has significantly rallied to hit a valuation of $55 billion, according to Bloomberg. After starting the year valued at $27 billion, Square is now ranked higher than all but four banks on the KBW Bank Index. This means Square is now worth more than Truist Financial, which fell to $49 billion in July.
Square still has a long way to go before it challenges institutions like JPMorgan Chase and Bank of America, but it is now just $20 billion beneath Goldman Sachs’s $74 billion value. Now that the country is opening back up, many businesses can expect to see a spike in transactions. But with the importance of decreasing points of contacts by eliminating cash usage, banks may not see the boost Square is seeing now.
In the long run, this is a huge step for the digital payment movement in this country, as we move closer to a cashless society. While mobile payment apps including Venmo, PayPal, Apple Pay, and Square Cash have become popular ways to make payments to friends and businesses, the true cashless revolution has already begun in Asia. Now the United States is being forced to make acute changes that may just lead to permanent changes.
As an example, telemedicine is something people have been talking about for years, but it had never gained widespread adoption. Now COVID-19 is forcing us to make changes to the healthcare industry, and now telemedicine has become a popular (and necessary) option in the US. As Bloomberg points out, a financial analyst suggested Square could capture 20 percent of US direct deposit accounts, which led to a 13 percent rally on Monday. We may be experiencing the same watershed moment for the banking institution.