Unraveling the Revenue Secrets of Public.com: How Does It Generate Profit?

Are you interested in investing and wondering how Public.com, an online brokerage, earns money? Well, the platform’s goal has always been to make investing accessible to all instead of being a privilege for the wealthy.

It’s now possible for anyone to carry out commission-free trading; so, you can invest without worrying about the fees eating into your profits. This has opened up the investment world to many more people. But you may still ask, how does Public.com profit if it doesn’t charge commission?

Public.com has a few ways of making money. These include voluntary tips from users, loaning securities, earning interest from cash balances, and marking up cryptocurrency transactions. They might also introduce premium accounts or subscriptions in the future which will carry a fee.

How does each way work?

1. **Tipping:** Public.com allows its users to give optional tips during trading. This is totally up to you – you can choose to tip or not. If you decide to add a tip, it will offset the company’s costs of routing trades to exchanges.

2. **Securities Lending:** Just like a bank lends money held in your savings account, Public.com’s clearing firm, Apex Clearing, loans out your shares to banks, market makers, and other investors. These borrowers pay an interest for the borrowed shares which helps offset Public.com’s operational costs.

3. **Cash Balance Interest:** Sometimes, investors leave cash in their brokerage accounts when deciding their next move. Public.com earns a small interest from these uninvested funds which, in the aggregate, becomes a significant source of income.

4. **Cryptocurrency Transaction Markups:** When you trade cryptocurrencies using the Public app, a markup of up to 2% is charged by Apex Crypto, which handles all crypto transactions.

While Public does not yet offer any paid features, there’s a chance they might introduce subscription fees for premium features in the future, just like other platform Robinhood does with Robinhood Gold.

Now, you might have heard of Payment for Order Flow (PFOF), which is employed by many free trading platforms as a way to generate revenue. Essentially, each trade that is routed through a clearing firm earns the brokerage firm a rebate. However, Public.com stopped using PFOF in February 2021, ensuring its financial ambitions are more in sync with its community of investors.

A few user-related questions answered:

– **Does Public.com charge any fees?**
While trading on Public.com is commission-free, some service fees might apply. For instance, wire transfers cost $30.

– **Does Public.com lend out my shares?**
Yes, Public.com’s clearing firm lends out shares to borrowers. But you can opt-out any time you want.

– **Does Public.com get payment for order flow (PFOF)?**
No, as of February 2021, Public.com is completely free of PFOF.

– **What is tipping on the Public.com app?**
Tipping is a completely optional contribution to support the platform when you make a trade.

Finally, remember that investing is now accessible to everyone. Platforms like Public.com allow you to trade without worrying about hefty commission fees. While it’s easy to get started, always invest with the understanding of how these start-up ventures operate and make money.

Ready to start investing? Register with Public to receive potentially up to $300 of free stock when you make a deposit.*

*Offer valid for U.S. residents 18+ and subject to account approval. Investment risks apply.