The cost? Square is charging 1.5 percent of the total to the business being paid. (The peer-to-peer version doesn't charge any fees). This is about half the 2.75 percent that Square's credit card reading app, Register, charges businesses. PayPal, in contrast, charges a 2.9 percent transaction fee for debit or credit card payments. (Here's a video explaining how it works.)
Square Cash for businesses is aimed at small businesses such as landlords, landscapers and dog walkers, who rely on checks for payments, and don't want or need credit card readers. Now, with Square's new "$Cashtag," they can be paid directly into their bank accounts, without the buyer or seller having to share addresses, phone numbers or any personal information.
The buyer just has to input the seller's "$Cashtag"—the dollar symbol plus their unique identifier into Square's "Cash" app or website—to pay from their debit card. Anyone can go to https://cash.me to set up an account. The first time visitors pay they input their debit card number, as well as a phone number or email address to set up an account. After that visitors just need to sign into their account.
Read MorePayPal co-founder aims to reinvent banking