North America’s most popular payment company Square Inc. is planning to add more services to its portfolio. Consumer lending and business loans will be the new services offered by Square. For this purpose, the company has collected data, the analyzing algorithm will decide the creditworthiness of the borrowers and enable them to arrange their loans in just a few clicks.
Square is an American merchant service aggregator, financial service, and mobile payment company. The company offers several software and hardware payments products such as Chip reader, Square Contactless, Square Register, Square Stand. Square also offers distinctive white plastic and user-friendly mobile payments hardware. It is known as a popular Bitcoin-friendly peer-to-peer payment app and cash app. Square was founded by Jack Dorsey and Jim McKelvey in 2009.
Recently, the company received Yahoo Finance Company of the Year award. With 2,300 employees, Square Inc. is the smallest company so far to be chosen by the Yahoo Finance for its annual award. Earlier Yahoo Finance has chosen companies such as Amazon, Facebook, and Nvidia but it seems that Square is doing well above its size.
According to a recent Wall Street Journal report, a food truck owner, Billy Joe Wilson recently borrowed $150,000 from the Square app to open a gastropub. Billy was using Square devices to process the credit card payments for his restaurant business. Before offering the loan, Square’s algorithm analyzed his business transactions and monitor his sales. Within a few days of applying for the loan, Billy received the loan amount. Billy has never expected that Square will offer a loan to him and to arrange that much of money will be so easy.
This is an example of how fintech companies are speeding up the process of disbursing loans. In the near future, the fintech companies will outpace the traditional banks which are bogged down by their size, bureaucracy, and technology lag.
Square Inc. formed its lending arm Square Capital, in 2013, which is driven by customer feedback. The company noticed that small business owners struggle to get loans. To resolve this problem the company is exploring ways to offer loans to its seven million users. The company stated that:
“We can also utilize Square data and machine learning to help our sellers find the best Square products for their business. We have a data science team devoted to using domain knowledge and feature engineering to predict a seller’s likelihood to use any given suite of Square product offerings.”
Square also has plans to open a bank in the United States to offer deposit accounts and business loans to consumers and businesses.