Square, the merchant-services unit of Block, is adding several new features to its banking products, aiming to tie their benefits together while deepening Square's relationships with businesses that use its core offerings.
Since launching a debit card five years ago, Square has steadily added to its banking services with products such as a
The new American Express-powered
The card's unique rewards program inverts Square's usual role by giving users $1 in free credit-processing services for every $3 a Square Credit Card user spends on the card toward business expenses.
"Traditionally Square works to help the seller take payments, but here we're helping sellers pay for some of their own expenses through our ecosystem," said Christina Riechers, general manager of Square Banking.
The Square Credit Card has no annual fee or late fees, according to Riechers, who noted that Square's credit card is still operating in a "beta" mode before rolling out more widely later this year. The credit card's issuer is Salt Lake City, Utah-based Celtic Bank, which has $2.4 billion of assets.
Square has also added a new twist to the loans it advances to merchant-processing users. Typically, Square's merchant loans are repaid based on a fixed percentage of a business owner's daily sales, and Square is adding loans that can be repaid on a fixed monthly basis.
Separating loan repayments from the ups and downs of daily sales gives some borrowers with other financial resources more control and predictability over their cash flow, Riechers said.
Square is also allowing business owners to add more data to their loan applications than just their merchant-processing receipts, which Square has typically relied on when granting loans.
"We're letting business owners tell us more about their other revenue streams and credit score so we can get a fuller picture of their entire business to make them a loan that might be larger," Riechers said.
Square will now give prospective borrowers the option to authorize a soft credit check, while considering borrowers' other assets. Square does not report Square Credit Card activity to credit bureaus, she noted.
Square has also added a couple of new features to improve cash flow for business owners who use the firm's checking account, which is offered through the $1.9 billion-asset Sutton Bank in Attica, Ohio. One new capability speeds up sellers' access to ACH funds earned through other channels (like Amazon or delivery apps) by up to two days, which Riechers said is a plus for business owners in a tightening economy.
Later this year Square will also switch on the capability for a business owner to connect up to four additional debit cards to a Square checking account to share with colleagues and coworkers to make business purchases. Through Square's dashboard, or the checking section of Square's POS app, business owners will be able to track authorized users' spending on each debit card, Riechers said.
"Some bigger businesses might have colleagues or employees that they want to deputize to buy goods for their business, and this is a way for business owners to use Square checking to manage overall spending within their business," Riechers said.
Riechers declined to say how many Square merchant-processing customers have adopted Square's business checking account, but noted that in the first five months of this year, Square debit card users spent a total of $1 billion, up 20% from the same period last year.
At the end of May, Riechers said Square sellers had accumulated a total more than $150 million in savings since Square announced its Square Banking rollout in July 2021, bundling a business checking account together with savings accounts that can be divided into different "folders," along with the previously existing debit card and loans.
"What we're focused on next is expanding similar lending and cash-flow management tools to more markets," Riechers said, noting that Square also offers loans to small businesses in Canada, Australia and the U.K.
