SAN FRANCISCO—Square has launched an in-house bank it says will allow it to “operate more nimbly” in an increasingly crowded fintech market.
The bank has begun operations after completing the charter approval process with the FDIC and the Utah Department of Financial Institutions, CNN reported.
Square Financial Services will provide business loans and deposit products to sellers who use its card reader and other point-of-sale services.
Running its own bank will allow Square to "operate more nimbly, which will serve Square and our customers as we continue the work to create financial tools that serve the underserved," Square Inc. Chief Financial Officer Amrita Ahuja said in a statement.
Square Financial Services will be an industrial bank, meaning it will offer limited financial services.
The company said it would begin with underwriting and originating business loans for Square Capital's existing lending product, which was previously provided in partnership with a third-party bank, CNN reported.
“The move could give Square an edge over competitors such as PayPal, which also provides merchant services and business lending in partnership with a bank,” CNN said.