It's obvious that when you're charging customers and paying invoices through the same interface, that you'll have more visibility on your cash flow and it'll generally be easier to use, but this goes so much further.
The reason those loans are easy is because Square know your history of charging customers. The reason they can pay "instantly" into your account is because they don't have to actually move any money until you pay out of your account, the reason they can charge no account fees is because they're charging at the point of taking payments from customers.
The economics of the whole offering are far different to what the regular combo of payment service provider + bank + loan company can provide.
Great move. Square has always been the sort of product that makes me wish I was in a business where I could use it.
In 2013 I joined a company named ZenPayroll, which focused entirely on…well, payroll. That company is now called Gusto and does payroll, health insurance, workers comp, HR, etc.
That didn’t come out of no where, but you have to start someplace.
It's all cyclical.
[0] https://stratechery.com/concept/business-models/bundling-and...
That's definitely not a necessary result of a combined product offering, but it's interesting to think about.
I mean, that's just fashion that evolved in response to the previous fashion, which was bloated software that did a million things badly. Fair enough that the pendulum should swing back the other way, but there certainly is a place for software that only does one thing and does it well.
As a general rule, these two would be very different target markets.
Precise why my company built a one-stop-shop SaaS for our domain (revenue operations). We need more of these, thinking from a user's point of view.
Square are demonstrating this here for business, some Chinese finance apps went down this road years ago, Revolut are billing themselves as a "financial super app".
There's tremendous advantage in having everything in one place. Each individual product can be 70% as good as best in market, but the value-add by having everything bundled in one place is huge.
[0] So long as you never ever leave Square for another system.
For what it's worth extant banking competitors offer substantially all the major services that Square does. JPM is a bank, a broker, a merchant acquirer (Chase Paymentech), they're a credit card issuer, a debit card issuer, an unsecured lender, as secured lender (mortgage broker).
Heck, Chase even operates a private instance of VisaNet.
What Square's doing isn't any different really, it's just flashier and better executed. And also, whatever this embarrassing crypto thing is: [1]
Some banks offer overdraft protection but it’s not obvious in lot of banking websites/apps in my experience and has been recent development. Plus - lot of people don’t understand the concept of overdrafts. They assume bank will deny if your account doesn’t have enough funds.
I’m surprised congress didn’t take action on overdraft fees as it mostly affects middle class and poor people.
Overdrafts have been opt-in by regulation since 2010. What banks have done is try to trick people into opting into "overdraft protection," which is really just the old system that allows a customer's checking balance to drop below 0: https://www.wellsfargo.com/credit-cards/features/overdraft-p... As long as a customer takes no action or just says "no," they won't be allowed overdraw their checking balance.
This doesn't make any sense and is just a money grab on the poor and desperate, because there is absolutely no technical reason why declining a checking or debit card transaction should cost $35+ to process.
I wish that were true. For significantly more than 10 years I have worked for a major bank that does not charge fees for overdrafts that pull from a loan or savings account. I still have seen few signs of the major banks deciding to follow our lead.
Normally in services you charge more from the people who are more able to pay, because they'll be willing to spend more money for the same service. Yet in financial services and banking, the more money you have to spend on the services results in the lower fees and costs across the board.
I think if there's something that needs to be systematically altered to close wealth gaps, that's a fine place to start.
I've always thought overdraft protection was disturbingly like "fire protection". As in, three dudes come to your door, and the skinny one says "Nice place ya got here, be a shame if it burned down" while one of the beefy ones fiddles with a Zippo lighter.
How? It’s not that hard to keep track of money in vs money out. I bet most of it is people that don’t understand it takes time for a cheque to clear or people that know an auto payment will overdraw their account but can’t do anything about it (ie: no money).
Overdraft fees should be illegal, especially for electronic transactions that get rejected.
Money in vs money out is very hard to keep track of when you don't have a buffer and you are always balancing empty.
I want to make an analogy to a seemingly simple buy known hard computer science problem, like resolving bugs caused by race conditions. Stuff which is simple if you can assume a single processing thread can become a nightmare when this assumption does not hold.
They also used to be allowed to simply reject the transaction if you didn't have the money and still charge a $36 fee. It was insanity.
If your checking balance never reaches close to zero, you wouldn't notice this. I was a teenager in 2010 and definitely got hit with a bunch of overdraft fees. Banks know these fees are bullshit (even now, with increased regulation), that's why they're so quick to waive them at first.
[0]https://scholarship.law.unc.edu/cgi/viewcontent.cgi?httpsred...
If you move through the page really slowly it sort of works, but real people in the real world scroll fast to scan the content of the page, and this page is a disaster to scan.
https://drafts.csswg.org/css-scroll-snap-1/
Here I want to learn about the features of Square Banking but I can't do so at a glance, on the landing page for Square Banking. The best solution is to just give up and search Google News for a summary:
https://finance.yahoo.com/news/square-launches-banking-busin...
https://web.archive.org/web/20210720152407/https://finance.y...
Scroll snapping is just "can i have a carousel without javascript", and is primarily a touch interaction. See this extremely brief demo https://codepen.io/tutsplus/pen/qpJYaK?editors=1100
I wouldn't call Square's site "scroll hijacking" - usually we use that to refer to when the actual native scroll behaviour/events are highjacked and prevented, and custom javascript scrolling happens. Instead on the Square site the DOM page is still scrolling natively, but an animation is progressed depending on the native page position. Maybe not ideal, but its much smoother and less jarring than actual scroll jacking.
It is 10x better than scroll jacking. Scroll jacking is so repulsive to see anywhere you aren't using a mouse wheel.
On the other hand, at least if it's in CSS, it'll be a single standard method that you can turn off via a browser plugin or whatever, rather than everyone rolling their own.
> Get a customized offer based on your card sales through Square, and then choose your loan size.
and then a bit further down:
> Repay it automatically with a percentage of your daily card sales through Square.
Such an incredibly obvious idea in hindsight. While I can see why putting all your eggs in one basket like this can pose something of a problem, there's no denying this level of integration is amazing for a small business.
PayPal burned me repeatedly as a teenager. Locked funds, some never recovered. I didn't do anything wrong.
Never. Again.
Maybe some people don't harbor this grudge, but to me PayPal is the epitome of incompetent and evil. Venmo, all of it.
It’s a nice feature.
Frankly, PayPal has been doing a version of this for years where they would put a hold on your funds and then (usually) offer you a loan that would cover most/all of the money held. Of course, they called all the shots, but the idea was there.
>Square, Inc. is a financial services company, not a bank. Banking services are provided by Square’s banking affiliate, Square Financial Services, Inc. or Sutton Bank; Members FDIC.
Um so they are insured by the FDIC?
Am I doing business with Square, Square Financial Services, Inc., or Sutton Bank?
Do I have any recurse when it comes to typical banking expectations / rules here when it comes to either of the three companies I may or may not be using?
Checking accounts are at Sutton Bank (partner bank). I assume the split is driven by Square Financial's three-year supervisory plan w/ FDIC and the mechanics of getting square off chase/wells card rails. Green dot did something similar by purchasing a chartered bank.
[0] https://www.fdic.gov/regulations/laws/bankdecisions/depins/s...
Says on the website - "Your account(s) are FDIC-insured up to $250K"
- T-Mobile offers an exclusive checking account for their customers
- Credit Karma promoting their own debit card
- Robin hood doing "Cash Management"
- Coinbase offering a debit card with crypto rewards
Has something changed with the ecosystem in the past 5 years? I'm half expecting NYTimes to release a banking/checking account these days where you get rewarded with newspapers.
At some point in our future we'll probably see the end of these rewards cards because the government will likely regulate it. Which I think is actually a good thing, because it's the people with the least amount of money that are footing the bill for those of us reaping the rewards.
That's one of the attractive things about the Apple Pay + Apple Card isn't it? I thought I read some time ago that Apple Pay anonymizes the card somehow so that transaction processors can't sell the data. It was for that reason that J.C. Penny stopped allowing Apple Pay as a payment method.
Ah, here's an article from April 2019: https://www.mytotalretail.com/article/j-c-penney-stops-accep...
Partner banks get more deposits and use their fat interchange rates to attract the developers/promoters of new products.
The others: profiting from interchange fees. If you can get your card to be “top of wallet” you can get a cut of every purchase a consumer makes. If you are a store, like Target, you can also drastically reduce the processing fees you pay to card issuers by redirecting those funds to yourself.
We also use the Target Red Card to save 5% at Target and the Amazon Chase card to save 5% at Amazon.
The big change is probably that actual banks' brand value got damaged to the point that people trust banking services with random consumer brands stickers on them more than they used to.
According to the St Louis Fed, the average interest rate for Small Businesses was about 3.5 - 5% [2]. For me this sounds like an incredibly bad deal.
I'm not 100% sure what the FRED chart you cited means by "Effective Loan Rate for Small Business Administration" but those are most likely collateralized.
Let's just hope for all borrowers inflation remains "transitory" and growing, than it isn't such a big deal.
However, you don't account for credit risk whereas the st louis fed rates are based on existing bank small business loans which are very conservative.
Presumably the expected defaults on Squares product would be very very high.....
How insulting, and yet still better than the competition
So yes, safe, insured deposits in savings accounts dont pay much at the moment. This has less to do with banks being greedy and more to do with current fiscal policy.
It has more to do with the state of the economy demanding low interest rates. When you bail out banks like in 2008 deposits are seen to be perfectly safe and thus depositors aren't deterred by increasingly shrinking or even negative interest rates, they still want that perfectly secure bank deposit because the government will bail it out.
If Square did get a bank license - this would be interesting since now they have all kinds of regulatory requirements to meet.
Unfortunately, it's probably going to take some time for people to realize the benefits of a "slow and inefficient" means of banking with lots of people in between. It sucks sometimes, but boy am I okay with it when they spot fraud or it takes someone days to empty my bank accounts instead of minutes.
Retail finance's CLI to the saccharine of these apps is Fidelity. Free CMA with no ATM fees (third-party ATM fees reimbursed), no minimums, free wires in and out, securities able to be held in the account and good customer service on the phone and via chat.
> Your business entity type is a sole proprietorship, meaning you pay taxes for your business as an individual as opposed to another entity type (often the case for self-employed individuals or independent contractors)
They are apparently looking to add other entity types in the future.
I have the worst luck, and all my new age accounts like Robinhood and Coinbase have little to no customer support compared to the incumbents.
I got lucky and the Robinhood situation resolved itself but I've been trying for over a year to contact Coinbase and circle the drain. Hopefully Square has better support.
$scrolljackingRant
All attempts are erroring out; signup endpoint is returning a 500.
I switched to OneFinance and have been generally happy with it as it caters most closely to the old Simple methodology, especially with configurable overdraft that was launched last month.
If anyone has experience with the others and how they've matured since Simple's departure, I'd be interesting to hear what you like and what you're excited for on their roadmap!
So ‘just like a bank, with the same security’ would be more accurate.
It's Square Banking. Not Square Bank.
To me this page is architecturally would be something overloaded with pointless decorative elements. Baroque?
So I'll assume they're like the rest - shitty / no customer support outsourced to god who knows, and they'll change "shifts" every 10 minutes.
No thank you, I'll stay with the good old, dinosaur banks.
I've definitely had some issues with customer service (not refunding a fee they said they were going to), but it's nice to have a "bank" with custom support
Just no all around to this product.
They issue the debit cards for Cash App. They also have worked with Robinhood (it looks like Robinhood may have moved on to JPM however)
