The role Square will play in the functioning of small business in the U.S. will likely expand with the anticipated move to act as banker in addition to acquirer and financial management system. The prospect of delivering consolidated business tools and capabilities including access to loans, and depot accounts in addition to lines of credit, point of sale functionality and payment acceptance and processing further entrenches Square as central player in the small business service arena.
Square chose to apply for an industrial loan charter, opposed to a traditional banking licen[s]e, because other aspects of its business are non-financial. Industrial loan companies enjoy many of the benefits of fully-fledged banks, and are also able to be part of larger nonfinancial corporations.
Mercator Advisory Group recognizes the move by Square, if approved, will pressure community banks to further expand their own capabilities to deliver a selection of business enablement services. Further, we anticipate Square will likely be investing to extend its own business advisory and consulting capabilities to further facilitate structured and managed growth for it clients.
Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group
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