Twitter CEO's Square launches banking services for small businesses.
Square Inc, the company led by Twitter Inc CEO Jack Dorsey, is launching banking services for small businesses as it continues to beyond payments processing.
Square Banking will offer small businesses with savings and checking accounts, as well as its existing loan service, which has been rebranded Square Loans, according to the San Francisco-based firm.
There are no minimum balance requirements, overdraft fees, or recurring fees with Square Checking, and savings accounts provide a 0.5 percent annual percentage interest on deposits.
Square Banking's head of product, Christina Riechers, believes that its new checking and savings accounts, which complement its debit card offering, will appeal to small businesses that have struggled to acquire access to more mainstream banking services.
In an interview, Riechers said, "There is no monthly fee," therefore we see this as having a strong potential to draw people into more established business banking.
Square Loans will lend back deposits received from small firms, she said.
Following the March debut of Square Financial Services, the company's industrial bank, which began operations after receiving charter approval from the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions, the new services have emerged.
Square is trying to expand its revenue streams beyond facilitating card payments for small businesses, and the industrial bank is part of that effort.
Cash App, the company's consumer business, has been booming, with revenue excluding bitcoin investments jumping 139 percent year on year to $529 million in the first quarter.
While only small business deposits will first be brought under the Square Financial Services banner, the company plans to have the bank work across its whole spectrum of products and services in the future, according to a representative for the company.
The new lending company will continue to provide loans to sellers based on transaction data.
During the pandemic, the company, which was previously known as Square Capital, witnessed a decline in sales, so it paused its core loan offering for small businesses and instead focused on delivering government-funded Paycheck Protection Program loans.
The company says that since restarting lending, it has seen a recovery in volume.
