Square Payment Solution Expands into Small Business Lending

[Corey Dutton]

A recent poll, as seen on Bank Innovation, revealed that the banking customers 35-year old and younger are inclined to use non-bank services like Square or PayPal over traditional banking services. Square is a payment processor for small businesses with a flagship product that is essentially a credit card reader that attaches to smart devices. The company has decided to branch out into ‘Square Capital,’ where it will begin to extend lines of credit to small businesses. The new offshoot of this non-banking, provider of banking services into a realm of financial services that have traditionally been services only offered by banks and credit unions represents a huge threat to U.S. banking institutions. According to a recent article in the Financial Times, Square Capital has been in the pilot phase for the past year, but the offshoot has made real loans to some of its merchants during the pilot phase. Some examples of Square merchants that have taken advantage of these pilot loans under Square Capital include a hair salon and a comic bookstore.

(Source: Financial Times: http://www.ft.com/intl/cms/s/0/fa3a3350-e5fe-11e3-a7f5-00144feabdc0.html?siteedition=intl#axzz337qA5uuS )

Posted by Corey Curwick Dutton