Block to refocus Cash App; stablecoin pay expands

Block's peer-to-peer Cash App will no longer operate in the U.K. as of September 15, ending six years of service.

Block attributed the move to a broader strategy that emphasizes growth in its home market of the U.S. over global expansion.  

In the P2P market, Block faces pressure from U.S.-based firms PayPal, PayPal's Venmo and the bank-supported Zelle, along with local services in Europe and other regions. The move isn't expected to impact Block's other functions in the U.K. or Europe. Block referred questions to the company's media statement. 

While Block's core business is enabling payments and extending credit for small businesses, Cash App in recent years has become a connective tissue for Block, supporting the merchant and consumer sides of the payment company. Cash also serves as a funding source for products such as Block's crypto trading and is marketed within Afterpay, Block's buy now/pay later unit.

Since retaking the CEO job at Block in 2023, Jack Dorsey has been cutting costs, a strategy that includes choosing parts of the business to discontinue or deemphasize while enhancing products with a greater earning potential. 

While Block scales back its global ambitions, it is doubling down on the U.S. The company is adding financial tools to Cash in the U.S. in an effort to make Cash operate more like a bank, with Block focusing on U.S. consumers earning up to $150,000 in yearly income. It's also positioning Cash as a merchant banker for its small businesses, with Dorsey recently telling analysts Block, which retains its original Square brand for its merchant services group, will make Cash the primary account for its business clients. 

Like most payment technology companies, Block struggled in 2022 and 2023 due to the impacts of a correction that followed rapid growth during the pandemic. Block reported improvements in profitability during its most recent earnings report, largely due to cost-cutting and downsizing. The company reports second-quarter earnings on August 1. —John Adams

Swedish payment company Klarna is combining its pay-by-bank service, called Sofortüberweisung, or Sofort, into Klarna's core payments product.

The integration is designed to improve security by requiring Klarna's two-factor authentication for Sofort-powered transfers. Klarna also wants to make it easier to access account-to-account payments at the point of sale. A2A payments are an older product that has gained traction in recent years as a way to avoid credit card fees.

Klarna positions itself as an alternative to credit cards, particularly for its well-known buy now/pay later business. 

Klarna acquired Sofort, a German-based company, in 2014, to boost its account-transfer capabilities and to access open banking, or the ability to use a single account to access multiple financial services, often from a third party.  Klarna is rolling out the Sofert integration slowly, with the U.K. being the initial market, and Germany added this week. —John Adams

Like Mastercard, Visa is aggressively pursuing the payments market in the United Arab Emirates, where there's a consumer and merchant population that is rapidly embracing digital commerce and a supportive regulatory environment. 

Ninety-five percent of small- to medium-size businesses say digital payments are superior to other methods, and more than 70% believe investing in automated payments is vital for their business, Visa reported in a survey of local UAE merchants.

"SMEs are the backbone of economies worldwide, playing a critical role in driving growth, innovation, and employment. In a rapidly changing environment, it's imperative for issuing banks to deeply understand their needs and develop targeted solutions that propel the SME sector forward," Salima Gutieva, vice president and country manager for the UAE for Visa, said in a release. 

Visa's strategy was partly about making the case for issuing banks to offer payments and other financial services in the UAE. Mastercard has also made several moves in the UAE, including a partnership with the Rochester Institute of Technology to train local technology talent. 

Bank of America and dozens of other banks have pursued consumers and businesses in the UAE and other parts of the Middle East in recent years, fueling competition in the market. —John Adams