Square’s point of sale solutions have played a major part in the success of millions of small-scale merchants and sellers over the past decade. Today’s announcement that the company will offer new banking services reveals the San Francisco-based merchant services innovator as the latest fintech to leverage banking to deepen engagement with its customers.
Square Banking, as the new offering is called, consists of two new deposit accounts – Square Savings and Square Checking – as well as the company’s rebranded Square Capital lending solution, now called Square Loans. The new savings accounts offer a 0.5% APY, and feature an automated savings function that makes it easy for merchants to set aside a percentage of every sale made on the Square platform. The new checking accounts have no account minimums, do not feature recurring fees, and do not charge for overdrafts.
“With Square Banking, we’ve reimagined the financial system for small business owners with their cash flow needs at the center,” Square Banking Head of Product Christina Riechers explained. “We’re introducing fair, accessible financial services that connect directly with our sellers’ payments, helping them unlock instant access to their sales, automate their savings, and receive personalized financing offerings.”
There are two interesting aspects of Square’s expansion into banking services. The first, as Riechers noted, is the ability of Square to leverage its relationship with its merchant partners into a potentially fast-growing small business banking customer base. The second aspect of Square’s move is that, unlike other fintechs that are looking to add banking services to their product suite, Square already has its own bank. Square Financial Services began operations in March after securing approvals from the FDIC and the Utah Department of Financial Institutions (DFI). That said, according to Reuters, only small business deposits will be a part of Square Financial Services for now. Business checking accounts, and the accompanying Square Debit Card, will continue to be FDIC-insured courtesy of a partnership with Sutton Bank.
Founded in 2009 by Jack Dorsey and Jim McKelvey, Square is a publicly traded company on the New York Stock Exchange under the ticker SQ. The firm has a market capitalization of $111 billion.