Fintech Cash App Reaching Customers Through in-House Clothing Line.

• Cash App has launched a new clothing brand, Cash by Cash App, during the pandemic.
• The payment provider has launched three different collections, with a fourth planned for October.
• The race to acquire customers is on as startups compete to be the go-to finance app.

Cash App is gearing up its customers to boost brand loyalty as it seeks to compete in an increasingly competitive finance app landscape.

Businesses commonly opt for practical goods like t-shirts and baseball caps for their loyal customer base. But there’s always a handful who deviate from the normal so-called swag in hopes of making a lasting impression — think of the iconic Wall Street banker’s bag that’s been popular with young Wall Street folks for the past four decades has fallen in and out of trend.

Cash App, the personal finance app that’s a subsidiary of payments giant Block, is trying to do just that. To stand out in a crowded payments market, Cash App launched a fashion brand, Cash by Cash App in 2020.

The line initially offered athleisure styling amid the pandemic. Then, last November, Cash App worked with rapper Megan Thee Stallion on a field service, Limited-edition collection, which Liang Shi, head of Cash by Cash app, said sold out of the few hundred units created. Cash App followed this April with the Future of Nature collection, his second line of his own.

Now the company is working with a yet to be named external designer on its fourth collection, which is due out this October.

“For us, a big part of our brand ethos has long been to empower financial independence, creativity and self-expression,” Catherine Ferdon, director of marketing and branding at Cash App, told Insider. “We recognize that fashion is indeed another important medium for self-expression.”

Block executives have been vocal about their desire for Cash App to become the consumer’s favorite super app. But the race for super app fame is hard-fought for many fintechs. Consumers can access new digital offerings from established incumbents like JPMorgan and Goldman Sachs, emerging players-turned-financial giants like SoFi or PayPal, and even non-banking companies like Walmart.

The crowded market has put even more emphasis on how apps attract new customers. And while traditional marketing and advertising spend remains a mainstay for most, some fintechs have gotten creative in how they attract people, from producing original content like podcasts or newsletters to high-profile partnerships with influencers.

Some experts say that unconventional advertising approaches can pay off big in the end.

“The most important marketing tool these days is word of mouth and eye-to-eye,” Allen Adamson, co-founder and managing partner of marketing firm Metaforce, told Insider. “People share pictures more than words, and taking your marketing from the rational world of ‘let’s explain why this app is so easy to use’ and into the emotional world is what it takes to break out.”

Trevor Williams, senior vice president of payments and fintech equity research at Jefferies, told Insider he believes Block is unique among scaled fintech companies when it comes to appealing to younger users and believes there is a “clever way” is to engage with consumers before they bank or relationship with a traditional financial institution.

It positions “Block to increase its mix of users over time who use Cash App as their primary bank account,” Williams said.

Block focuses on marketing budgets

Cash App’s launch of a third clothing line comes as Block executives take a closer look at how the company is marketing itself during a tough economic time.

Amrita Ahuja, Block’s chief financial officer, said in August the company plans to cut its planned operating expenses by $250 million for the remainder of the year. “We have reduced spending on experimental and less efficient launches, adjusted risk loss estimates based on more recent trends and slowed the pace of hiring,” Ahuja told analysts on the second-quarter earnings call.

But Ferdon told Insider that Cash App is “interested in investing in the line.”

“Money is inherent in lifestyle and the next generation feels that and they expect their bank to understand that about them,” Ferdon said. “The core of our strategy at Cash App is to make sure we recognize and underscore that.”

While Cash App declined to disclose the amount it spent developing its apparel efforts, parent company Block’s financials offer a glimpse into its marketing and branding spend.

In the second quarter, Block spent $531 million on sales and marketing across its businesses — which now include Square, Cash App, Afterpay, and music streaming service Tidal — a 42% increase year over year.

Cash App is a significant revenue stream for Block. Cash App first launched in 2013 and generated gross profit of approximately $705 million in the second quarter — almost half of Block’s overall profit.

Cash App’s investments in closing the loop

Prices for items in the Cash by Cash app line range from around $20 for a t-shirt to $200 for a raincoat. All proceeds from the last two collections were distributed to charity, nonprofit organizations like Power Shift Network, a group of climate and social justice organizations.

A bestseller from the Future Nature line was a bomber jacket adorned with a Bitcoin “B” on the outside and the table of contents from Satoshi Nakamoto’s original white paper on Bitcoin embroidered on the inside.

But the most popular picks were the t-shirts and hoodies, according to Shi. Former Victoria Secret model Elsa Hosk was reportedly spotted wearing a black Cash by Cash App hoodie from the company’s first collection. Both Shi and Ferdon declined to state how many items were sold in total.

It’s not just about marketing. Dan Dolev, a senior analyst and fintech equity researcher at Mizuho Securities, told The Wall Street Journal in 2020 that the availability of Cash by Cash app apparel for purchase through the company’s app — and the fact that Cash App customers are using it So got a 25% discount – “could be a test for a closed-loop ecommerce checkout button.”

Insider previously reported that Cash App has focused on owning more of the payment rails used by merchants to keep both businesses and consumers in the block ecosystem, rather than relying on traditional networks like Visa and Mastercard. Closing that loop, experts said at the time, would mean Cash App would not have to pay fees to established financial players.

Cash App’s Ferdon said that the Cash by Cash app is “pretty well integrated into the company’s broader payments ecosystem.”

“In the future you will see these integration points coming even closer,” added Ferdon.