Ever since the wider public learned how Robinhood makes money, investors have been asking this questions about other so-called “free investment apps.” The reality is that to stay “free” Public and other apps have to make money somewhere.
Public is transparent about the issue, and they recently eliminated the practice of Payment for Order Flow (PFOF). Here’s how Public makes money:
Securities lending: Public earns interest from lending shares to investors and institutions through their clearing firm, Apex.
Interest on cash balances: Public earns interest on uninvested cash balances — currently 0.2% as set by the Federal Reserve.
Tipping: This new feature is meant to replace some of the income Public made when they still used PFOF. Tipping is entirely optional, and you can tip up to 5% of your order to Public.
Miscellaneous fees: There are minor fees Public charges for outgoing transfers, paper statements and confirms, broker assisted trades, etc. Public makes a small amount of money from these fees