Square May Expand into Consumer Lending
Square Inc. may be branching out into consumer lending, according to a new report from The Wall Street Journal. The company already has lending programs for small businesses with Square Capital, but the new program would be focused on the customers who shop at those small businesses.
To test the waters, Square will launch a pilot program next week in six states: California, Florida, New York, Colorado, New Jersey, and Virginia. Businesses that use Square Invoices will be able to offer lending options to their customers. The loans will be provided by Square, not the businesses.
The loan amounts will range from $250 to $10,000 at a fixed interest rate of 9.99%. Repayment periods will be set at three months, six months, and one year. Consumers do not have to agree to the loans. They can pay their invoices as usual, including the 2.9% plus $0.30 transaction fee.
Many consumers have now interacted with a Square card reader. Square started as a small dongle that plugged into a smartphone, and offers complete payment terminals for small businesses. Earlier this year, they increased the speed of their chip card reader by 14%, reducing transaction times to just 3.6 seconds. Some competitors take 20 seconds or longer to process transactions on chip credit cards.