When it comes to financial technology (fintech) companies, one of the most important in the world is privately-held Stripe. In its latest funding round in March, the company was valued at $50 billion, making it the second-most valuable U.S. start-up company behind SpaceX.

Stripe is big and fast-growing. And that's why investors may be interested in knowing that fellow fintech company Block (SQ -1.14%) could get a boost from Stripe thanks to a recent announcement.

Stripe now supports Cash App

Stripe offers software that allows businesses to build online payment and billing features. And on June 7, the company announced that its payments software will now support Cash App -- specifically, Cash App Pay.

Block has two sides of its business. Its Cash App ecosystem is a suite of products and services for consumers, whereas its Square ecosystem offers products and services for merchants.

Block introduced Cash App Pay back in September 2021. It was supposed to be an easy-to-use contactless payment option that Square merchants could offer users of Cash App. But the number of merchants accepting Cash App Pay has expanded over time.

According to its annual update that was published in April, Stripe processed $817 billion in payment volume in 2022, rising 26% from the volume it handled in 2021. And according to Bloomberg, management believes it will process more than $1 trillion in volume in 2023.

To put these numbers into perspective, PayPal had total payment volume of $1.36 trillion in 2022. And PayPal has been around much longer than Stripe. Granted, the two companies don't overlap in all areas. But it shows just how fast Stripe has caught on with merchants.

As of March, Cash App had 53 million active monthly transacting users. By offering support, Stripe is potentially opening up the customer base for its merchants. However, I believe this is a bigger deal for Block than for Stripe. It gives users of Cash App more reason to use it, since Cash App Pay will now be accepted in far more places than before.

Why Block stock could be a good investment

As of the first quarter of 2023, 54% of Block's gross profit comes from the Cash App side of the business. Therefore, a large part of the investment thesis (the rationale for why the stock will go up) revolves around growing Cash App. And to do that, the company needs to drive adoption and engagement by increasing the number of services that it offers. 

Cash App Pay is perhaps a small part of the process, but it is a part nevertheless. As Cash App is more useful and versatile, it gives users more reason to download the app or use it more frequently. That's a good thing for the investment thesis as far as I'm concerned.

It's worth pointing out that Block has done exceptionally well at increasing usage of Cash App, which supports an optimistic perspective regarding its future. In Q1, gross profit for Cash App was up an impressive 49% year over year. Moreover, Q1 inflows -- money entering the ecosystem -- was up 27% to $61 billion, which was its best inflow growth in over a year.

Block's management has done the right things for growing the Cash App side of its business in the past. And that growth has continued with positive signs up to the present quarter. Gaining Stripe's support is just another piece of this promising puzzle and why I still believe Block stock belongs in the portfolios of many investors.