Square has launched a new product called Square Banking. The new capability combines a checking account, savings accounts, debit cards and loans. Square is planning on using this capability to convince small businesses that it's just easier to manage all their money needs through them.
Square original business model was payments processing, launching a debit card for its business customers in 2019. This model implies that business owners can start spending the money they're bringing in through Square payments without transferring the money to a separate bank account first.
With the launch of the new capability, the company is scaling beyond debit card offering by adding checking and savings accounts. Thus, every time customers make a sale; they can access the funds from their new Square checking account. There are no monthly fees, no credit checks and no minimum balance.
Since it's a traditional checking account, customers can get their account and routing numbers — they can receive and send money from their account directly. Behind the scenes, checking accounts are currently provided by Sutton Bank — your funds are FDIC-insured.
Square now also lets customers open savings accounts. The company is taking advantage of the fact that it also manages sales through its payments products. Customers can choose a percentage of their Square sales revenue so that they can save money daily without having to think about it. Users can also create different folders for different business needs — sales taxes, new machines, etc.
Square offers an annual percentage yield (APY) of 0.50%, but that rate is only guaranteed through the end of 2021. Transfers between customers savings accounts and their Square checking account are free and instant.
Inclusion Times Newsletter
Join the newsletter to receive the latest updates in your inbox.