Cheat Sheet: Square now has a bank
- Payment technology firm Square lends billions to merchants using its point of sale technology.
- The company has just received an industrial bank charter and is moving deeper into financial services.
Square Financial Services has begun operations roughly a year after receiving preliminary FDIC approval.
What’s happening: The payments technology firm was awarded an industrial bank charter in Utah. The Salt Lake City, Utah-based Square Financial Services will provide business loans and deposit products to sellers who use its card reader and other point-of-sale services. Square says it will begin its banking operations with underwriting and originating business loans for Square Capital’s existing lending product. Looking ahead, Square will use Square Financial Services as the primary provider of financing for Square sellers across the U.S.
Square Capital facilitated approximately 57,000 loans during the fourth quarter of 2020 totaling $254 million (a 62% year-over-year decline impacted by the pandemic). Square Capital had also facilitated approximately $857 million in Paycheck Protection Program loans to more than 80,000 small businesses in 2020.
Before its launch, Square Capital loans were issued through a partnership with Celtic Bank.
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