PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Square’s Pursuit of an ILC Charter

By Sarah Grotta
July 9, 2018
in Analysts Coverage
0
1
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
square

square

You may have seen the announcement last week that Square was pulling its application for an Industrial Loan Company (ILC) charter.  At least temporarily.  Square is pursuing their own charter to have greater control over their lending activities to small businesses.  Today, Square’s lending activity is executed through a partner bank who also can control the types of loans, underwriting and fees that Square charges.  Digital Transactions reported that the Independent Community Bankers of America are looking at Square’s retreat from the application as a “win” for community banks:

“We can call it a victory,” Chris Cole, executive vice president and senior regulatory counsel with the Independent Community Bankers of America, tells Digital Transactions News. Still, the ICBA takes Square at its word that it will be making a revised application to the FDIC. The application Square withdrew, as well as the one it intends to re-submit, are related to a so-called industrial loan corporation it plans to set up in Utah. 

Cole: “We don’t think this fight is over yet.” 

The Washington, D.C.-based ICBA strongly opposes the application but concedes the “victory” is probably temporary. “That they want to re-file indicates to me there was some sort of deficiency with their application,” Cole says. “We don’t think the fight is over yet.” 

Square comments that the pull back is just a part of the process and they will be back to seek approval from the FDIC.

Square, which says its application to the Utah Department of Financial Institutions for an ILC charter remains “active,” wants to set up the bank so it can directly offer loans and other financial services to small-business clients. Currently, its Square Capital operation makes hundreds of millions of dollars worth of loans through Celtic Bank, an unaffiliated Utah industrial bank. 

Square now plans to overhaul its application, according to a spokeswoman. It originally filed its paperwork in September. “We have been engaged in constructive dialogue with the FDIC, and our decision to withdraw and refile was a procedural step in the review process that will allow us to amend and strengthen some areas of our FDIC insurance application,” the company says in a statement. “Square Capital is uniquely positioned to build a bridge between the financial system and the underserved, and we continue to work closely with the FDIC and Utah DFI on our applications.” 

It is interesting to contrast the pursuit of a charter by Square with Pay Pal’s approach which is to continue to build and acquire more financial services capability, yet still rely on bank partnerships and sponsorships to gain access to the networks and systems they need.  Pay Pal may find that managing bank relationships is an easier task than effort to acquire and maintain a charter.  It is doubtful that the Independent Community Bankers of America are particularly happy about that approach either.

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory service at Mercator Advisory Group

1
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: Square

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    supply chain payments

    The Payment Process: The Supply Chain’s Most Overlooked Cyber Risk

    July 17, 2025
    Navigating Global Fintech Regulations Through Strategic Regulatory Arbitrage

    Navigating Global Fintech Regulations Through Strategic Regulatory Arbitrage

    July 16, 2025
    AI Is Turning Accounts Receivable Into a Strategic Powerhouse

    AI Is Turning Accounts Receivable Into a Strategic Powerhouse

    July 15, 2025
    Embedded Finance

    Embedded Finance: Bringing Payments Under a Single Umbrella

    July 14, 2025
    Making Real-Time Payments a Reality

    Fulfilling the Promise: Making Real-Time Payments a Reality

    July 10, 2025
    mortgage

    The Rich Benefits of In-House Payment Systems

    July 9, 2025
    digital cards

    Beyond Plastic: Why Digital Cards Are the Future

    July 8, 2025
    What Premium Card Overhauls by Chase and Amex Reveal About the Credit Card Market

    What Premium Card Overhauls by Chase and Amex Reveal About the Credit Card Market

    July 7, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result