Square Financial Services:
Square, Inc., a well-known financial technology company, has recently announced the launch of its industrial bank, Square Financial Services [1]. After completing the charter approval process with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions, Square Financial Services has officially started its banking operations [1]. This move is a significant step for Square as it expands its services beyond payment processing and lending to include traditional banking products such as checking accounts, savings accounts, and loans [4].
The Birth of Square Financial Services
The idea of establishing Square Financial Services started in 2017 when Square applied for an industrial loan company (ILC) charter with the FDIC [2]. An ILC is a type of bank that can be owned by non-bank corporations, allowing them to offer banking services without being subject to the same regulations as traditional banks [2]. In March 2020, Square received conditional approval from the FDIC and the Utah Department of Financial Institutions to operate as an ILC [2]. The company then spent the next year completing the necessary requirements to obtain a full charter, which it finally received in March 2021 [1].
What Does Square Financial Services Offer?
As a newly established industrial bank, Square Financial Services offers a range of banking products and services. These include business loans, deposit accounts, and debit cards [4]. The bank’s primary focus is on serving small businesses that use Square’s payment processing services [2]. By offering banking products, Square aims to provide a more comprehensive suite of financial services to its customers and help them manage their finances more efficiently.
The Advantages of Banking with Square Financial Services
One of the main advantages of banking with Square Financial Services is the convenience it offers to small business owners. Since most of Square’s customers are small businesses, they can easily access banking services through the same platform they use for payment processing [2]. This integration allows for a seamless experience and eliminates the need for business owners to manage multiple accounts with different financial institutions.
Another advantage of banking with Square Financial Services is the competitive interest rates it offers on its deposit accounts [4]. According to Square’s website, its savings account offers an annual percentage yield (APY) of 0.50%, which is higher than the national average of 0.05% [4]. This higher interest rate can help small businesses earn more on their idle cash and improve their overall financial performance.
The Future of Square Financial Services
The launch of Square Financial Services marks a significant milestone for the company as it expands its services beyond payment processing and lending [1]. With the addition of banking products, Square aims to become a one-stop-shop for small businesses’ financial needs [2]. The company’s CEO, Jack Dorsey, has also expressed his vision of creating a more inclusive financial system that serves everyone, regardless of their background or financial status [2].
In conclusion, Square Financial Services is a new player in the banking industry that offers a range of banking products and services to small businesses. With its integration with Square’s payment processing platform and competitive interest rates, the bank aims to provide a more convenient and efficient banking experience to its customers. As Square continues to expand its services, it will be interesting to see how it disrupts the traditional banking industry and creates a more inclusive financial system.
