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Comment by duxup | Hacker News Reader

>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?

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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...

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.

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

> Um so they are insured by the FDIC?

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

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.

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

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