Square Adds Consumer Lending Service

The American FinTech Square already allowed merchants to accept card payments and provided them with cash advance services via Square Capital. A year ago, they made it clear they intended to address end users’ needs, too, through the addition of payment facilities. Tests have been run in six States in the US. Square now unveils Square Installments: a credit solution allowing customers to spread their payments.

Square was founded in 2009. They crafted tools for their partner merchants and craftsmen, helping them start their business, as well as manage and expand it with Square Capital. As they aim for BtoBtoC segments, they now add a way for them to increase their sales figures with Square Installments.

Merchants may rely on this service to spread their payments over 3, 6 or 12 monthly instalments for qualifying purchases between 250 and 10,000 dollars, with 12 to 18% APR applied. By way of incentive, in some cases, the first 3 months are interest-free. Interested customers can apply online or in-store: an agreement-in-principle is sent instantly, and is approved, they get a one-time-use virtual credit card to be used online or in-store.

This service allows merchants to feature an affordable, easy to roll out credit solution, likely to improve their sales. In turn, merchants’ customers are provided a more flexible payment option and faster access to payment facilities. Square charges 3.5% +15 cents per transaction.

Comments – A global service for Small merchants

With this launch, Square focuses on small merchants, sometimes unable to implement affordable financing solutions adapted to their structure. They intend to help them boost their sales: roughly 70% of the consumers say they would favour small merchants or local stores if financing options were proposed. This tool also contributes to customer retention and improves satisfaction levels. Square found a way to secure their own merchants’ loyalty, providing them with a means to improve their sales. Even if this service comes at a cost, it is still easy to use for merchants and their average cart amounts may increase, which could make up for this investment.

Some other FinTechs already went for similar services, i.e.: PayPal, Affirm or Klarna (which just partnered with H&M). Merchants might end up leaving behind larger-scale groups and go for these new entrants instead since their services are easy to implement and include various features (acquiring, mPOS, financing, etc.).