The hidden engine inside Block Inc: Why its flywheels matter more than you think

LiveWire11-18

Most investors know Block Inc. (the parent company of Square, Cash App and Afterpay) as a fast-growing fintech with a loyal user base, but far fewer appreciate the deeper structural advantages ...

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(the parent company of Square, Cash App and Afterpay) as a fast-growing fintech with a loyal user base, but far fewer appreciate the deeper structural advantages ...</p>\n\n<a href=\"https://www.livewiremarkets.com/wires/the-hidden-engine-inside-block-inc-why-its-flywheels-matter-more-than-you-think\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4227","symbol_name":"交易和支付处理服务","start_time":0,"source_url":"https://www.livewiremarkets.com/wires/the-hidden-engine-inside-block-inc-why-its-flywheels-matter-more-than-you-think","article_id":"2584608162","we_media_id":null,"thumbnails":[],"rights":{"source":"livewire_stock","url":"https://www.livewiremarkets.com/wires/the-hidden-engine-inside-block-inc-why-its-flywheels-matter-more-than-you-think","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2584608162","pubTimestamp":1763425446,"columns":[],"sourceInfo":{"source_id":"livewire_stock","name":"Livewire Markets"},"weMediaInfo":null,"summary":"Most investors know Block Inc.  as a fast-growing fintech with a loyal user base, but far fewer appreciate the deeper structural advantages underpinning the business. When you zoom out a little, Block is not simply a payments company, it is quietly building a series of reinforcing flywheels across its two major ecosystems - Cash App on the consumer side and Square on the merchant side.Sitting between these two ecosystems is a two-sided demand network that already creates meaningful value. And as Cash App Pay continues to grow, that demand network is gradually turning into something even more powerful: a true commerce flywheel. In our view, this engine is one of the most under-appreciated aspects of Block’s strategy.Cash App began life as a simple peer-to-peer payments tool, but today it is a complete financial platform used by more than 58 million Americans. The user flywheel is straightforward:. users store more money in Cash App including paycheques, deposits and tax. risk models all","collect":0,"end_time":0,"defaultTopTitle":"livewiremarkets.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4227":"交易和支付处理服务","BK4598":"佩洛西持仓","LU1791807156.HKD":"BGF WORLD FINANCIALS \"A2\" (HKDHDG) ACC","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","IE00BHPRN162.USD":"BNY MELLON BLOCKCHAIN INNOVATION \"B\" (USD) ACC","LU2360107671.USD":"BGF FINTECH \"A4\" (USD) INC","LU0106831901.USD":"贝莱德世界金融基金A2","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU2211815571.USD":"ALLIANZ POSITIVE CHANGE \"AT\" (USD) ACC","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","BK7158":"交易和支付处理服务","BK4585":"ETF&股票定投概念","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU1861558580.USD":"日兴方舟颠覆性创新基金B","LU1861217088.USD":"贝莱德金融科技A2","XYZ.AU":"Block Inc","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","LU2211817866.USD":"Allianz Food Security AT Acc USD","XYZ":"Block, Inc."},"translate_title":"Block Inc内部隐藏的发动机：为什么它的飞轮比您想象的更重要","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XYZ":1.5,"XYZ.AU":1.5},"content_text":"Most investors know Block Inc. (the parent company of Square, Cash App and Afterpay) as a fast-growing fintech with a loyal user base, but far fewer appreciate the deeper structural advantages underpinning the business. When you zoom out a little, Block is not simply a payments company, it is quietly building a series of reinforcing flywheels across its two major ecosystems - Cash App on the consumer side and Square on the merchant side.\nSitting between these two ecosystems is a two-sided demand network that already creates meaningful value. And as Cash App Pay continues to grow, that demand network is gradually turning into something even more powerful: a true commerce flywheel. In our view, this engine is one of the most under-appreciated aspects of Block’s strategy.\n\n\n\n\n\n\n\n\n\nThe Cash App–Square Commerce Flywheel\n1. The Cash App user flywheel\nCash App began life as a simple peer-to-peer payments tool, but today it is a complete financial platform used by more than 58 million Americans. The user flywheel is straightforward:\n\nMore\n     users lead to more peer-to-peer activity — a classic network effect.\nThose\n     users store more money in Cash App including paycheques, deposits and tax\n     refunds.\nAs they\n     spend, Block gathers behavioural and transaction data which improves its\n     consumer risk models.\nBetter\n     risk models allow Block to offer more responsible credit, including\n     Afterpay instalments and Cash App Borrow.\nMore\n     credit leads to more spending, which attracts and retains more users.\n\nAs this loop spins, Cash App becomes more useful and more convenient. Users aren’t locked in, they simply stay because the entire product gets better the more people use it.\n2. The Square merchant flywheel\nSquare has built a similar engine on the merchant side:\n\nMore\n     merchants join Square for its payments, point-of-sale and software tools.\nThese\n     merchants process transactions that generate rich operational data.\nThat\n     data improves Square’s merchant risk models which underpin Square Loans.\nBetter\n     underwriting leads to more efficient merchant credit helping sellers grow.\nGrowing\n     merchants process more through Square attracting more merchants.\n\nAgain, it’s a self-reinforcing system: data → underwriting → credit → volume → more data.\n3. The two-sided demand network (the under-appreciated middle layer)\nThe real magic sits in the space between Cash App users and Square merchants.\nEven when a user pays with a Visa-powered Cash App Card, meaning the transaction is not running on Block’s own rails, Block still creates value:\n\nCash\n     App offers discovery, showing users Cash App Offers and Afterpay-powered\n     offers from Square merchants.\nMerchants\n     use these offers to acquire customers.\nUsers receive\n     discounts.\nMerchants\n     receive incremental demand.\nAnd\n     Block orchestrates both sides of the market.\n\nThis is a two-sided demand network. It’s not a traditional flywheel yet as Visa still processes these transactions, so Block doesn’t capture the full economics, but it’s strategically valuable. It lets Block match the right user with the right merchant, deepen engagement and pull the two ecosystems closer together.\nIt’s a bridge. A powerful one. But bridges don’t spin. For a flywheel, Block needs the transaction to run on its own rails.\n4. Cash App Pay turns the bridge into a commerce flywheel\nThis is exactly what happens when users pay with Cash App Pay.\nCash App Pay is Block’s own payment rail. When it is used at a Square merchant, Block becomes:\n\nthe\n     issuer (Cash App),\nthe\n     merchant acquirer (Square),\nthe\n     payment network (Cash App Pay),\nand the\n     risk engine (Block’s underwriting models).\n\nThis creates a genuine closed loop. Block sees the full transaction, who the user is, who the merchant is, what was purchased and the behavioural context. Just as importantly, Block keeps more of the economics, because there’s no Visa or Mastercard sitting in the middle.\nThis transforms the demand network into a commerce flywheel:\n\nCash\n     App users discover merchants through instant discounts.\nThey\n     pay with Cash App Pay, keeping more economics inside Block.\nThese\n     transactions generate richer data, improving risk models on both sides.\nBetter\n     models enable more credit for users and merchants.\nMore\n     credit → more spending → more offers → more merchants → more users.\nThe\n     loop strengthens because Block controls every step.\n\nThis logic is similar to what made PayPal powerful on eBay, but Block has the advantage of owning both sides of the ecosystem and the payment rail.  \nAdoption is accelerating\nCash App Pay has been in the market for several years and is already scaling meaningfully, but the momentum continues to build. A recent milestone is the launch of the product at Target stores nationwide, which brings it into one of the largest and most frequented retail environments in the United States. This is not the start of adoption, but it does signal growing mainstream acceptance and deeper merchant integration.\nAt the same time, Afterpay co-founder Nick Molnar noted that Cash App Pay GPV is growing 70 percent year-on-year. That level of growth highlights how quickly consumers are shifting spend onto Block’s own payment rail and how strong the underlying demand flywheel already is.\nTaken together, these developments show that Cash App Pay is scaling across both sides of the network, with meaningful traction today and a long runway still ahead.\n5. Why this matters for investors\nBlock’s share price often trades on headline numbers such as Gross Payment Volume or Monthly Active Users. But in our view, the real value lies in the architecture, the way these ecosystems reinforce one another over time.\nMost payment companies control only a thin slice of the value chain. Some own the consumer. Some own the merchant. Some own the network. Almost none own all three. Block does.\nAs more transactions shift to Cash App Pay, Block gains stronger data advantages, higher margins, more defensible risk models and tighter integration between Cash App and Square. Block’s underlying mechanics are improving as it scales and the market still underestimates that. Rather than being just another payments company, Block is building a self-reinforcing network connecting tens of millions of consumers and millions of merchants. As Cash App Pay adoption grows, these connections strengthen, the data improves, margins expand and both sides of the ecosystem become more valuable to each other.\nThe underlying mechanics of this business are compounding in ways investors are only beginning to understand. And that’s exactly the kind of long-term, structural advantage we want our investors exposed to.\n6. Looking ahead to Investor Day\nBlock’s Investor Day is tomorrow, and we are particularly looking forward to hearing more about the future plans for Cash App Pay, including how Block intends to scale the rail, which merchant categories will expand next and how the economics of the system will improve as more volume moves onto Block’s own network.\n\n\n\nNever miss an update\n\n    Enjoy this wire? Hit the ‘like’ button to let us know. \n    Stay up to date with my current content by \n    following me below and you’ll be notified every time I post a wire","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0,"need_auth":false,"code":"91000000","status":"200"},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.35.11","shortVersion":"4.35.11","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2584608162","isCrawlerRequest":true}