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Square gets item level data on each merchant. That means exactly what was sold and when. Plus, they get info about who bought it and can see things like a buisness suddenly getting huge numbers of new buyers as opposed to returning, etc.

The real question is how much does that level of granularity really matter?

Its not worth a banks time, with their current set-up, to process loans under $50,000.

But at least with Square we have relatively more transparency about their activities and intentions with such data. So while it may not literally be more, it's like functionally more?

I think the main point trying to be made there was that there is nothing stopping banks from doing something similar. In other words the "data" the article keeps mentioning isn't the advantage that makes this possible for Square.

The problem is most banks don't have the technology to scan a customer's bank account and decides his/her credit worthiness. That's how antiquated banks are and they wouldn't touch anything subprime after 2008 financial crisis.