July 20 (Reuters) – Square Inc (SQ.N), the company led by Jack Dorsey, CEO of Twitter Inc (TWTR.N), launches small business banking services as it continues to grow beyond payment processing.
Square Banking will offer small business savings and checking accounts as well as its existing loan offering, which has been renamed Square Loans, the San Francisco-based company announced Tuesday.
Square Checking has no account balance, overdraft fees or recurring fees, and savings accounts offer a 0.5% annual return on deposits.
Square hopes its new checking and savings accounts, built on its debit card offering, will be attractive to small businesses struggling to gain access to more mainstream banking services, said Christina Riechers, product director of Square Banking.
“There is no monthly fee, so we see great potential in it to bring people into more formalized commercial banking,” said Riechers in an interview.
Small business deposits are borrowed back through square loans, she said.
The new services come following the launch of the company’s industrial bank, Square Financial Services, which began operations in March after completing the charter approval process with the Federal Deposit Insurance Corporation (FDIC) and the Utah Department of Financial Institutions.
The industrial bank is part of Square’s effort to expand its revenue stream beyond making card payments easier for small businesses.
The company’s Cash App consumer business is booming, with first-quarter sales excluding Bitcoin increasing 139% year over year to $ 529 million.
While initially only small business deposits will be grouped under the umbrella of Square Financial Services, over time the company will seek to make the bank work across its full range of products and services, a spokesman said.
The renamed lending business will continue to offer sellers loans based on data from their transactions.
The company, previously called Square Capital, saw sales decline during the pandemic, with the company pausing its main small business loan offering to instead focus on offering government-funded loans from the Paycheck Protection Program.
Since the resumption of lending, the company has reportedly recovered.
Reporting by Anna Irrera; Adaptation by Jason Neely
Our standards: The Thomson Reuters Trust Principles.