How Square is Becoming a Fintech Game Changer

Square has been making big waves in the fintech industry lately. You might know Square as the brainchild of Jack Dorsey (yes, co-founder and CEO of Twitter Jack Dorsey) and Jim McKelvey that has been processing payments for solopreneurs and small businesses since it launched in 2009. The mobile payment platform also powers a number of other fintech products—including Cash App, Caviar, Square Capital, and Square Payroll—but a couple of recent announcements have cemented the company’s status as a fintech powerhouse.

Square launches banking for small businesses

On July 20, 2021, Square announced the launch of Square Banking, a “suite of financial products purpose-built to help small business owners easily manage their cash flow and get more out of their hard-earned money.” This new line of business includes all typical banking capabilities, including checking, savings, and loan servicing.

However, Square’s banking products come with specific advantages for SMBs. Loan approval, for example, is based on card sales rather than credit history or personal collateral. Expensive, ongoing interest is replaced with a single flat loan servicing fee, and loan repayment is based on a fixed percentage of daily card sales that gets automatically deducted. 

Similarly, the Square checking account doesn’t require an opening deposit or minimum balance and small businesses won’t have to worry about overdraft or account fees. And when it comes to saving, account holders will be able to customize their savings goals and enjoy a 0.5% APY that’s 8x the national average.

Traditional financial institutions may have products and services intended to serve small businesses, but Square’s solutions have the added benefit of being tightly woven into its selling tools. It might seem like a small advantage, but it could be a deciding factor for startups or the millions of businesses that are already using the Square platform.

Square to acquire Afterpay

Less than two weeks after the Square Banking announcement, Square announced its plans to acquire Afterpay on August 1, 2021. Afterpay, the popular buy now, pay later (BNPL) platform, is a unique addition to the Square family. It helps businesses grow by making it easier for customers to make larger transactions and repeat purchases, while also offering consumers payment flexibility and more control over their financial wellness.

“For Square,” the company said in its press release, “BNPL presents an attractive opportunity supported by shifting consumer preferences away from traditional credit, especially among younger consumers, consistent demand from merchants for new ways to grow their sales, and the global growth in omnichannel commerce.”

The $29 billion acquisition is expected to further strengthen the relationship between Square’s Seller tools and Cash App product. Sellers will be able to list their businesses on the Afterpay marketplace, where prospective customers can discover small businesses across the country alongside big name retailers like Bed Bath & Beyond, Dillard’s, and Ulta Beauty. The buy now, pay later concept is by no means a novel idea, but the combination of Afterpay’s installment payment system with Square’s flexible commerce platform will help small businesses expand their customer base and drive revenue goals.

The Square fintech ecosystem

These recent announcements are evidence that Square is becoming an all-in-one platform for managing a small business. In addition to Square Banking and the imminent Afterpay integration, Square offers a wide range of fintech tools including:

These tools—especially when combined with its other unique offerings like loyalty program management, product photography, and marketing automation—make Square an exceptionally versatile platform for day-to-day business management. As Square becomes a bigger player in the fintech industry, small businesses will likely benefit from having a solution that meets a variety of different needs.

Read next: 11 Tips for Switching Ecommerce Platforms

Kaiti Norton
Kaiti Norton is a Nashville-based Content Writer for eSecurity Planet, Webopedia, and Small Business Computing. She is passionate about creating relatable, research-based content that helps small businesses thrive. When she's not writing about small business technology, she's sharing her musings about fashion, cats, books, and skincare on her blog.

Must Read