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Square Banking

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321 pointselvinyung168 comments

It's amazing to me how much of a better product can be created when everything is in one place.

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.

Maybe we can also start moving away from feature-limited Saas offerings that are so damn proud that they focus on One Thing And One Thing Only when customers want just one affordable app to handle all their work and not fifty-eleven ones that become crazy expensive.

You seem to be operating under the assumption that an integrated product will necessarily be cheaper, as opposed to simply more convenient.

That's definitely not a necessary result of a combined product offering, but it's interesting to think about.

It's often much cheaper. Take a look at What Microsoft offers with their Office 365 subscription plans or Zoho One.

This topic is pretty well studied and discussed elsewhere, often in the context of antitrust. The Google-able phrase would probably be "bundling vs unbundling" or similar. It's not _always_ the case that a bundled product is cheaper, though, as you point out, often it is.

There are many lawyers representing companies accused of monopolistic behavior who would be on your side of this discussion.

> feature-limited Saas offerings that are so damn proud that they focus on One Thing And One Thing Only when customers want just one affordable app to handle all their work

As a general rule, these two would be very different target markets.

oh, so like Apple, but for the B2B space?

This. And interoperability, stepping over each other, different teams owning different solutions, conflicts and overlaps etc.

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.

> One Thing And One Thing Only

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.

The history of tech companies can be viewed as a constant bundling and unbundling of products, depending on where the inefficiency is.

The history of all companies can be viewed as a constant bundling and unbundling.... once upon a time there were these things called conglomerates.

That’s the idea with ERP but in practice the deal is: it does all things for all people, still has holes for edge cases, almost always a horrible UI, and the TCO is way over what’s promised after you pay for implementation and support.

Customers want those things but the companies you are referring to haven’t been around long enough to build all of them. Believe me, it’s on their slide decks.

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.

The history of products has always been bundling and unbundling [0]. There have been products that bundled everything but some customers decided they didn't like the bundle, so they went with a la carte options. Now we're seeing these a la carte companies bundle again to achieve more scale. And then the unbundling will happen again in due time.

It's all cyclical.

[0] https://stratechery.com/concept/business-models/bundling-and...

This is where fintech has been headed for some time -- a bundle of complimentary products all in a single app (payment provider + bank + loan company + crypto + etc.).

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.

Sounds like the 1990s App Edition. (Remember bancassurance, universal banking, etc.)

Taken to its logical conclusion (or back to the dinosaur monolithic systems from pre-history), each individual product can be shit as long as one product is a must have.....

without wanting to start a flame war this is how I've often felt about the MS Office suite. Each product on it's own is Ok, but there was always at least one that I've needed and always ended up with the entire suite in the end.

The lending piece is very similar to what Shopify has been doing in ecommerce.

As a small business owner do you really want your banking to be tied to your POS system though? Why not offer Square 'housing' too. Sell with Square and live in a Square condo[0]

[0] So long as you never ever leave Square for another system.

Generally speaking banks leave a lot to be desired in the US, which is Square's banking charter. They can make a better bank, and they can provide complementary financial services in one place.

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]

[1] https://twitter.com/tbd54566975

I'm a bit confused about "the regular combo of payment service provider + bank + loan company" - from what I see (perhaps it's a difference between markets?), all that you describe is exactly what most commercial banks offer to businesses, they want to have it all in one place, they can make a better loan offer if they have your cash flows, etc. The main difference between them and Stripe is that a bunch of banks will not do the IT integration part of card payment processing but will only be the 'merchant bank' handling the financial part and settlement after e.g. some merchant gateway routes the individual messages, but they were offering the combo of card acceptance/accounts/payroll/loans/credit lines/etc decades before Stripe existed.

Maybe. Every time Intuit integrates another app into their main QBO product, it makes things worse. To some extent, when they are separate apps that connect to QBO, I get more control over what data transfers. When it’s integrated, they tend to make automatic adjustments with no ability to edit them. Obviously this is a choice they are making to do things a bad way, but my point is just to share a counter example of integration being a net negative.

My point was not about the integration in terms of the products, but the integration in terms of the business models and pricing. It doesn't look like Intuit is doing anything smart there?

0 overdraft fees. Yay. More like it. It will force major banks to rethink their overdraft fees as a revenue center. As someone who was not so well financially just a decade ago, overdraft fees seemed like penalty for being poor. When you are living paycheck to paycheck, you never know when your account will get overdrawn. And most evil thing was - bank will deny the charge because you didn’t have enough funds but will still charge you for $34 fee.

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.

Yeah, this is huge in an age where a lot of people are dinged through recurring subscriptions. You could rack up 5 or 6 charges and not even realize it, at which point you're out hundreds of dollars in overdraft fees.

I always struggled with this concept, why not stop at 0 when the account is overstretched? Here in Europe, for most people I would say, it's quite rare that the account goes to 0, and if it does, the transactions simply don't go through (unless it's a credit card). Isn't that asking for borrowing money at no fee? Don't get me wrong, I absolutely despise predatory bank charges, but wonder if that's a bit much to ask a a consumer (i.e. no charge for borrowing money I don't have?). Or is this just about the penalty fee for going into overdraft, and not the actual fee for loaning of money?

Being able to go below 0 is not tied to having a credit card. Nearly all debit cards issued in Europe can do this to. The only ones that don’t are things like Electron (systematic authorization), but they don’t play well with “fast” systems like motorway tollgates

So what happens here in the UK with my visa debit card, is that if I somehow go below 0 using it(very difficult, but it has happened before) then my bank sends me a text saying "hey, you have gone into unarranged overdraft, please pay in some money before tomorrow 3pm or we'll charge you a fee".

But of course, that implies that the bank isn't greedy.

You used to be automatically opted into overdraft. Also, you could still get hit with an overdraft fee even if they rejected the charge. Banks also used to structure transactions to force overdrafts if they could. It was really bad.

In France many banks propose an overdraft service which is limited ( as an example, for a student with no banking history to 200 euros), and is basically a mini free loan. There are rules like you can't stay on overdraft more than X days ( iirc the only one I've seen is 30 days), in which case you pay a fee.

> It will force major banks to rethink their overdraft fees as a revenue center.

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.

https://www.fdic.gov/consumers/overdraft/

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.

So how do you opt-out? Or is this an action you have to take when creating the account.

You opt-out or opt-in when you set up the account or anytime afterwards. I know only because I just setup checking for my teenage son and it was something the agent asked during the process. I pushed back and declined even though they gave me the end of the world spiel.

Yes, but if you do not opt into overdraft, you will still be charged a “non-sufficient funds” (NSF) fee when the bank declines your transaction. And the NSF fee is usually higher than the overdraft fee.

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.

Depends on the bank, I would imagine. Anecdotally, I've never been charged a fee for having a transaction declined because of insufficient funds, nor has my wife, and collectively that's ~5 different banks.

Based on my personal experience, all the big banks in Canada do it. The fee is 45-48 CAD for each declined transaction, no matter the amount.

Back in the day (when we had to go to school uphill both ways), I met a banker who told me, "whatever your bank is charging you for a bounced check, it isn't nearly enough". Then he described how the system worked: the actual physical check had to be sent back from your bank, to the Federal Reserve branch of the receiving bank, then to your branch of the Federal Reserve bank, and then to your bank. Not electronically: I'm describing the movement of the actual physical paper check. So, there was a real cost to everyone for a bounced check and of course the person who wrote the bad check should pay. That makes sense.

Of course, this makes no sense in a world of electronic transfers via ACH. The banks that are still charging $35 for a bounced transfer are engaging in something barely more legal than theft.

Let alone the cost changes for a bounce, a decline is very different from a bounce.

But also that bounced check was in a big stack and probably got 3 minutes of employee time spent on it across all those institutions combined. I bet that banker was describing some exceptionally double-dipped charges if they thought it wasn't high enough.

Super interesting to learn this. I find that people often assume the things that don't make sense in today's world simply never made sense but often that's not the case! You're right, overdraft fees DO make sense in the world of physical checks the system just hasn't caught up (intentionally or not). Thanks for sharing!

> you never know when your account will get overdrawn

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.

maybe you have never lived through a period of sustained financial stress. Yes, people in that situation understand that it takes a few days for a check to clear. One of those checks is your paycheck, which you need to clear to cover your other costs. The other is the check you wrote to the grocery store so you could eat, or your rent check. Which clears first? Did you time it right? What if your paycheck was delayed by a day?

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.

This is true. Having an extra few hundred dollars made a huge difference to me since I was always juggling the payday vs rent money as well.

Credit cards are not easy to get with no credit history either. I eventually was able to get a card but it had a $250 limit.

Banks used to structure these charges to create overdrafts whenever possible. They made it very difficult for you to see what your actual usable balance is.

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.

In 2006 PayPal tried to deduct ~$500 dozens of times in a 48 hour period due to what was obviously a software bug. This resulted in me being overdrawn by around $900. No matter who I spoke to on the phone with Bank of America, nor which branch manager I met with in person, nobody could do anything to help me.

The most I accomplished was having a branch manager agree to waive 1 overdraft fee since I had never overdrafted my account before.

PayPal was even less helpful.

If I enable overdraft protection with my current bank (Wells Fargo) then they will charge me something like $17 to transfer money from my savings account to cover a charge that my primary account wouldn't have enough funds to cover.

This was a good reminder that I need to switch banks. Maybe I can find a good Credit Union in my area.

Anecdata: I overdrafted a few months in to having my credit union account. The bank manager literally called me on the phone that day and asked if I could come in and cover the charges. I couldn't because I was too far away or out of town or something. Manager asked if I could come in the next day, to which I said yes, and did, and received no overdraft fees.

Another credit union (which I have since left) in my area was a total nightmare to do business with. 6-10 transactions were met with shocking resistance and frustration. Check reviews for your propsective bank if possible.

> This was a good reminder that I need to switch banks.

When you do, try your best to do what I've done ever since my mortgage processor screwed up and double charged me: never use anyone else's online services; do all the banking that's possible from your bank's online bill pay. At least that way the people who are pushing money out of your account via automation report up through the same people who manage the rest of your account ;)

Also, credit unions seem to be happy to let you maintain an account with a balance but no fee in a way that banks aren't. As a result, I have my main checking account that I use for everything, and a second account at a completely unrelated institution where I keep 30 days worth of cash. I spent $10 for che(que|ck)s and an hour of time getting it set up, which was well worth buying me a month of insulation against any number of risks.

I wrote about how this happened to me in a comment here (8 years ago, dang!) https://news.ycombinator.com/item?id=6424493

You must not be familiar with the banks' previous tendency to rig the game and make sure the charges all hit your account and in the most profitable sequence before the deposit was applied?[0]

[0]https://scholarship.law.unc.edu/cgi/viewcontent.cgi?httpsred...

Instead the extortionary practices will be moved to the foreign exchange rate or some other more opaque mechanism.

> Some banks offer overdraft protection

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.

I remember over a decade ago or so my bank offered this new overdraft "protection" where you could setup an amount of money to use from your saving account to make up the difference in the event of overdraft. One day I cut a check that was $5 over what was in my checking account and found out there was a $75 fee for overdraft. It was not at all obvious in their advertising that fees would still apply. Never made that mistake again.

The tyranny of scale creates terrible incentives in banking. Someone whose average balance hovers around $100/month might well cost the bank more money than they can earn off the balance, while someone with $10,000 is basically free.

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 think we really have to take a step back away from this annoying scrolling / auto-moving element behavior for product info pages. I had a moment where my mouse was chasing a moving 'Loans' tile.

Designers have gotten really carried away. This stuff looks nice when you click through it in Figma, because it's a slideshow. But when it's interactive it's a pain in the butt.

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.

I feel like everything these days is "optimized" for mobile sites. When viewing on a desktop they all look horrible.

Often derided as "scroll jacking" or more politely referred to as "scroll snapping" it's being added to the CSS spec so likely not going anywhere.

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...

Ugh.

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.

This behaviour has nothing to do with scroll snapping.

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.

From TFA:

> For instance, it is easy for a user to land at an awkward scroll position which leaves an item partially on-screen when panning.

> To this end, this module introduces scroll snap positions which enforce the scroll positions that a scroll container’s scrollport may end at after a scrolling operation has completed.

Which is exactly what this page is doing.

> primarily a touch interaction

It's exclusively a scroll interaction, whether the pointer event is the result of mouse or touch input.

> the DOM page is still scrolling natively

I'm not sure what you're trying to say by "DOM page." JS is reacting to the scroll position of the viewport. The user experience is the same.

It might sound similar, but it's very different in practice.

Does this page enforce the scroll positions that a scroll container’s scrollport may end at after a scrolling operation has completed, in practice?

Sorry to disagree. The interaction you see in the page is not scroll snapping.

With scroll snapping you the user have always control of the scrollable content. What you do not have control over is where it will stop scrolling. A similar behavior to forced guides in a movable element on rails (such as drawers).

This page doesn’t scroll at all, and uses the scroll as a time control for a “movie”. And that is scroll jacking, as it hijacks the scroll position to do something completely different.

This page, at least on mobile, is also guilty of implementing it in the worst way possible: without any alternative scroll indications and without smooth continuous transitions that make it clear that you are controlling the animation through the scroll.

Apple is somewhat better at doing this since the scrolljacking procedure usually brings you to an element which, at the end of a glamourous entrance, actually scrolls away with the page.

I tried scrolling that demo with my mouse wheel and it "snapped" quite spastically down to 4. Even once I realized what the intended behavior was, it was still difficult to control: https://youtu.be/1A1c51GFGoc

Seems to work as intended with the touchpad, to the point where it was hard to even tell that the browser was doing something different.

From my experience, scroll snapping is quite nice. On the mobile view of https://www.nytimes.com/, if you scroll down enough, you'll find an example of a scroll snapping row of opinion pieces.

It is 10x better than scroll jacking. Scroll jacking is so repulsive to see anywhere you aren't using a mouse wheel.

This was the "Aha!" part for me:

> 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.

Stripe has been doing this for at least a few months now… maybe since last year.

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.

It's a very expensive loan though. I did the math on our stripe offer, and it was o

Yea, we recently got a Stripe Capital loan offer, but it didn’t seem compelling at all. We’re clearly not their target customer for that but as a tech startup doing SaaS I kind of figured we would be their target customer. The offer was orders of magnitude less than our ARR on that account.

It's an expensive loan though. Stripes offer was about 45% APR, which was higher than Kabbage, Fundbox, and a host of other fast/easy loan providers.

This is something PayPal has offered small businesses for probably close to a decade now.

But then you have to interact with PayPal.

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.

Venmo is crucial to college life.

So has square through a different mechanism, “square capital”.

2021 is a great time to own a small regional / community bank. All the mature FinTech companies are trying to buy a bank to expedite the cumbersome bank chartering process (+ mortgage origination and servicing companies are too)

Indeed. And a good time to have a banking as a service business. Have a look at Cross River Bank. They have grown their balance sheet 3x in the last two years. It’s not just US though. In Southeast Asia same trend; big tech platforms like Grab and Shopee are buying small bank license holders on the cheap to start taking deposits and build their ecosystem on top.

sure, they are, but the bank holding company act (BHCA) restrictions on ownership/source of strength requirements are a kick in the head. You can go the Greendot route (just up and convert yourself to a bank holding company), Varo route (same but get a fresh OCC charter), or take your chances with an ILC application.

>Square Banking

>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?

Sutton Bank is a real bank with full FDIC insurance. Seems like Square Banking is just a pretty UI on top of that.

Sutton Bank is the deposit taking institution and therefore wear the customer / deposit risk. Pretty much everything from the payment rails and up appears to be Square.

This really reminds me of how Simple was actually just a layer on top of BBVA who then ended up closing Simple and now BBVA has merged with another bank and is changing again.

Simple started out as a layer on top of The Bancorp Bank (TBBK), and we intended to support multiple backing accounts before the merger with BBVA.

You might hit some recurse trying to get through their phone menu

That’s a really good question. In the event of an insolence, can you as a customer of Square get through to the real banks in the back? Would the banks treat you as their own customer and fulfill their FDIC obligation?

Yes usually the backing account is in the end user's name in these schemes.

> Um so they are insured by the FDIC?

Says on the website - "Your account(s) are FDIC-insured up to $250K"

Fidelity offers cash management accounts fdic insured up to $1M. They do this by “sharding” your account across multiple fdic banks.

Square Financial Services is a Utah-chartered industrial loan company (ILC) with FDIC insurance [0]. Savings deposits go here.

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...

While Square makes (more) sense to get into the banking game, I've noticed a lot of companies only tangentially related to finance doing similar things, and I wonder what it's indicative of:

- 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.

I assume it's because being a bank allows you to invest the deposits and turn a profit.

Its a function of the stability of the bank partnership model and the success of baas apis like galileo, combined with the economics of debit interchange for institutions under the Durbin amendment cap.

Partner banks get more deposits and use their fat interchange rates to attract the developers/promoters of new products.

I don't know if anything has changed necessarily, but anecdotally I think the business model has been validated in a high profile way. Accruing returns on stored money (like RobinHood) has largely supplanted the wave of "fresh take on charging you transaction fees" model of Venmo and Cash App.

Everyone wants in on the game. There's this really big piece of the pie where fees and interest come into play. Every transaction has fees and some people carry balances that generate a lot of money in interest. It's how credit card providers can offer rewards.

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.

There's also money in selling the transaction data, isn't there?

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...

T-Mobile: helping the underbanked.

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.

I self identify as middle class. It was pretty exciting when my wife and I both opened T-Mobile Money accounts and capped out their $3,000 balance for access to 4% APR. Even the 1% APR for additional funds is attractive, as far as a savings account goes, no?

We also use the Target Red Card to save 5% at Target and the Amazon Chase card to save 5% at Amazon.

White label providers is a thing, there's only a handful of operators doing the actual banking/payment services behind that.

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.

Banks are also sticky - people don't often switch them, so once you start, its hard and unlikely you'll move. That helps ensure your product stays in use.

I guess at some point, starting a business will be equivalent to downloading the square business app.

stripe is pretty much there...

Square has confirmed they are having issues: https://www.issquareup.com/incidents/9hzcgjpvj9dv

Rough day to announce your next big product, for sure. Currently unable to access my business account.

It did finally come up for me. Signing up (had a Square account for years, but wanted this to be specific to a small business I have) was pretty quick and easy, as was setting up the checking account.

This seems like a promising alternative to Simple, which shut down a few months ago

Yes it does. I loved Simple and I can't stand the new BBVA app. its so awful.

Amen

What has happened to Simple? I have seen their TV ad non-stopped for a while, then it stopped.

BBVA bought them in 2017 and killed it 3 years later.

PNC acquired all of BBVA's US banking business recently.

BBVA bought Simple in 2014, and killed us in 2021, so they kept us on for a good 6 years. I was honestly surprised they didn't do it earlier, such as when they axed the whole C-suite in 2017.

This isn't a consumer service; it's for business customers already using Square for payments and other business related expenses.

I'm curious about the small business loans. I'm from Europe and the animations suggests for a $9000 loan a total repayment of $10305. Let's assume you make $5000 in revenue per month and they use 10% as a repayment cut per transaction. That would yield a 20 month long repayment schedule. The "interest" would be roughly 7% annually. In today's world, isn't that greedy? In today's world, Warren Buffet can issue a 0% coupon bond[1]. I'm just perplexed. Especially since it's Square and not Goldman Sachs or JP Morgan.

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.

[1] https://cbonds.com/bonds/698053/

[2] https://fred.stlouisfed.org/series/EEBXSSNQ

In a word yes.....

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.....

7% is a low interest rate for an unsecured small business loan.

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.

I can't really tell. I haven't taken a loan yet.

Let's just hope for all borrowers inflation remains "transitory" and growing, than it isn't such a big deal.

You have to add profit margin and default risk on top. 7% for a business that you have lots of information about is still pretty bad though. It should be 4% all inclusive. You're right about one thing. The flat fee for the loan actually ends up obscuring the complexity. It's difficult to compare the square loan conditions to conventional ones.

> 0.5% APY on savings accounts

How insulting, and yet still better than the competition

Seems to be right in line with other online only banks.

Low-risk yield doesn't grow on trees. 0.5% is about what a 3 year treasury bond was paying at the beginning of the month (its lower now). Banks dont really need deposits to make loans right now either, since the reserve ratio was changed to 0% last year.

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.

In the past I've shopped around and found that you can find personal bank accounts that pay small amounts of interest (~1% in recent years), but business bank accounts wouldn't pay anything. It's nice to see this option, which will hopefully draw some people and simultaneously convince competitors to offer similar products.

Yeah, a lot of credit unions especially have reward checking with ~1% rates. You always need to jump through some hoops like having direct deposit and a minimum number of transactions on their debit/credit cards (which is where they make the money to pay the extra interest). Still, if you can meet these requirements, its not a bad way to lessen the effect of inflation on money kept for day to day expenses in a checking account.

>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.

Did Square get a bank license or is an existing bank being used behind the scene?

If Square did get a bank license - this would be interesting since now they have all kinds of regulatory requirements to meet.

Square has an ILC: https://squareup.com/us/en/press/square-financial-services-b...

Nope. I'm keeping Schwab for my banking needs. The last thing I need is a "bank" with more data about me than they really need and a lack of impeccable phone support.

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.

These app-only banks seem to prey on the Robinhood customer set: users who respond positively to a nice UI and are willing to pay for it through friction, feature restriction and non-existent customer service.

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.

Fidelity doesn't offer small business banking, which is what this is.

In case anyone was thinking this .5% APY savings account would be great for their company, this launch is just for sole proprietors.

> 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.

Given the issues that Chime customers have had[1], and the fact that this seems to be organized in roughly the same way (actual banking services are provided by a contracted bank at a distance), I'd be a little skeptical.

1. https://www.propublica.org/article/chime

Chime customers? Sounds like they've been closing fraudulent accounts.

The biggest question I would have is: How good the customer support is?

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.

Realistically.... 0

Warning: The site has some funky scrolling, but if you keep going there is more information that eventually shows up.

$scrolljackingRant

Downside to anything associated with @jack is that every tweet is flooded with spammy and low-grade crypto comments. (was checking to see if there was info re the 500 errors)

Looking for a new business bank for the small reselling business I run with my wife, so I thought I'd sign up.

All attempts are erroring out; signup endpoint is returning a 500.

Looks like they are having issues - https://www.issquareup.com/

Site looks very nice but is somewhat unpleasant to use on desktop. Would have preferred a more basic experience.

Does it allow business sign up? Like for accounting and limited liability?

Yes, this product is targeted at small businesses, not personal use by individuals.

Jeez this was hard to read with the annoying scrolling

Just like a bank, without the security. Have a look like modern banks are done say in the UK - Monzo etc.

Also, just to note, Monzo USA and Monzo UK are identical in name only. The US version has a fraction of the features of the UK version and they don't seem to be iterating as quickly as other neobanks after Simple's departure.

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!

I think you’ve missed a couple of details. The loans are provided by square’s ILC, and the checking account is an FDIC insured one with Suffolk bank.

So ‘just like a bank, with the same security’ would be more accurate.

just try getting customer service from cashapp...near impossible.

"Square, Inc. is a financial services company, not a bank. "

> just one below is says "Square, Inc. is a financial services company, not a bank."

It's Square Banking. Not Square Bank.

Yeah but the banking products are provided by a wholly owned subsidiary (savings accounts and loans) and a partner company (checking accounts and debit cards), both of which are banks. The products are indeed offered by banks owned or partnered with Square, but not directly by Square, Inc. itself.

Regardless, if Square were to offer legitimate 2FA I would probably feel more comfortable using their debit card for daily life..Can't seem to find any details regarding this on the FAQ though.

For sure. It's surprising how many legit banks believe that cell phones are appropriate for authentication of large transactions.

Everything is a probability game; it’s not about reducing risk to zero (impossible!) but having less risk than the alternative.

Yes, although the checking and savings accounts are both insured up to $250k via FDIC, which is all that matters to some people.

PayPal

RIP Chime.

The brutalist website design for this new product is suffocating. Tried it on many browser widths on my desktop.

Huh, I always think of "Brutalism" in the context of web design as "no CSS, no JS, lots of <h1>." I guess maybe it needn't be unstyled, but certainly is unsubtle.

To me this page is architecturally would be something overloaded with pointless decorative elements. Baroque?

This isn’t a brutalist site just because it has little color.

Yeah, another app-only bank. Or at least that what it seems. The desktop site in unreadable. Giant fonts.

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.

Yeah, I don't trust these startups handling my money. Not only that, but the bank that they have doing back-end services for them, Sutton Bank, seems like a tiny local bank. Guaranteed their own back-end services aren't in-house.

Just no all around to this product.

Square is a public company. Not a startup by any means.

Do they follow the SV "Move fast and break things" mantra?

Sutton has been around for 140 years.

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)

I'm just saying how it looks. I'm not about trusting my money to a mom-and-pop-looking credit union that outsources everything, I want a powerful firm that does everything in-house and has robust security.

That's reasonable, but pretty much every business that manages money usually has a third-party bank behind the scenes (though many do use a big bank like JPM or WF)

I use Citibank for my business, I hear you, you can always go into a branch or pick up the phone to speak to a person, but their online banking system is pretty terrible and outdated by about 20 years which is why I often have to pick up the phone. I wish we could have the best of both worlds.

My experience with dinosaur banks (specifically HSBC and TSB) has been one of pure frustration. I can generally tolerate some friction in the system, but just dumb things like "to change your address we need to send you a letter that you need to sign and return to us" make using the dinosaur banks totally radioactive to me relative to using the new generation of fintech apps.

After a really bad experience with Chase (and negative experiences with other big banks) I decided to try something different. I ended up settling on Capital One - they have branches, but depending on your area, it may as well be an online only bank.

Capital One was an online-only bank before online-only banks were a big thing. It started as "ING Direct" before the sale to Capital One.

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

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