By
Godfrey Benjamin
April 20th, 2024
Following the success of the Square Debit Card and Square Capital, the company is looking to further aid small businesses to better manage their finances.
Square Inc (NYSE: SQ) has launched Square Banking, a suite of banking products and services as part of its Business Toolkit “for every business”. The suite features an array of banking services like savings, checking and loans that Square merchants can take advantage of.
Following the success of the Square Debit Card and Square Capital, the company is looking to further aid small businesses to better manage their finances.
Jack Dorsey’s San Fran-based company, initially known for its hardware products, has gradually branched off into providing various financial and business management tools for small businesses.
Square Banking: Savings, Checking and Loans
Square Checking accounts are powered by Sutton Bank, a member of the Federal Deposit Insurance Corporation (FDIC). Merchants can access funds generated from sales through the checking account. These funds are usually instantly available after processing a payment. Subject to technical issues, availability may not be instant. The funds can be accessed using the Sutton Bank-issued Square Debit card which can be used wherever MasterCard is accepted. Funds can also be transferred by Automated Clearing House Network or via Square Payroll to pay employees.
Square Savings is a deposit account that allows merchants to stow away a percentage of every sale they make through Square. Merchants can choose what percentage of their sales go into the account. They can also organise their savings by folder. For example, “Taxes”, “Rainy Day”, “New Printer”.
Square savings accounts are powered by Square Financial Services, Inc. There are no monthly fees, minimum deposits or minimum balances attached to these high-yield savings accounts. Also, transfers between Square checking and savings accounts are free. For the remainder of 2021, an annual percentage yield (APY) of 0.50% will apply. Beginning in 2022 the APY in effect at a particular time is what will apply. APYs will be subject to change. In a case where a merchant applies the optional premium features, earnings from the savings account may be affected.
As Square Financial Services is an FDIC member, all funds in Square savings accounts are FDIC-insured for up to $250,000.
Square Loans, an upgrade of Square Capital, offers loans to qualifying merchants based on the data Square has on them. Square loans can be serviced daily by allocating a fixed portion of every sale towards them. Loans have to be paid back within 18 months.
“With Square Banking, we’ve reimagined the financial system for small business owners with their cash flow needs at the centre,” said Christina Riechers, Square Banking’s Head of Product. “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.”
Square: Diversified Portfolio and New Projects
Over the years, Square has diversified its portfolio from hardware to include services and applications like point of sale services, business management tools and the popular money transfer app Cash App which accepts Bitcoin and is the source of almost 50% of Square’s quarterly revenue.
In March, Square purchased a majority stake valued at $297M in rapper Jay-Z’s Tidal streaming service. Conditions of the deal are that Tidal will operate under Square but independently and CEO Jay-Z will join Square’s board. Earlier this month, Dorsey announced a Bitcoin-centric project by Square simply called “TBD”. According to Dorsey, the purpose of the project is to create open-source, decentralized financial applications.