American financial services and digital payments company led by Twitter CEO Jack Dorsey, Square is introducing banking services for small businesses, as it continues to expand beyond payments processing.
Square Banking will provide savings and checking accounts for small businesses, as well as its existing loan service, which has been renamed Square Loans, according to the company. The renamed lending company will continue to provide loans to sellers based on transaction data.
As per the reports, there will be no account minimums, overdraft fees, or recurring fees with Square Checking, and saving accounts will provide a 0.5 percent annual percentage rate on deposits.
Ms. Christina Riechers, Square Banking’s head of product noted, “Square hopes its new checking and savings accounts, which build upon its debit card offering, will be attractive to small businesses who have struggled to gain access to more mainstream banking services.”
“There is no monthly fee so we see this as having high potential to get folks into more formalized business banking. Deposits collected from small businesses will be lent back through Square Loans,” Ms. Riechers said in a statement.
The new services come following the launch of the company’s industrial bank, Square Financial Services, which commenced operations 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 the efforts by Square to extend its revenue stream beyond facilitating card payments for small businesses.
While only small business deposits will first be brought under the Square Financial Services umbrella, the company plans to have the bank work across its entire range of products and services in the future, according to a spokesman.