Accommodate is making another attempt to break into banking.
Approval of the plan would allow the payments company to handle without going through outside banks and intermediaries. If approved, Square would also get access to a coveted quirk of the banking world — deposit insurance.
San Francisco-based Square is well-known in the payments sector for its credit card processor, payment computer equipment and Cash App. The start-up also issues small business loans through Square Capital.
The firm has reapplied with the Federal Place Insurance Corp. for a special industrial loan company license that allows less traditional financial concerns to accept government-insured deposits. It pulled its first application in July, but the company was clear back then that it have in mind to refile after it could “amend and strengthen” the application.
“Square Capital is uniquely positioned to build a bridge between the monetary system and the underserved, creating access for small businesses to both capital and the economy,” Jacqueline Reses, Square Large letter Lead said in a statement Wednesday. “We will continue to work closely with the FDIC and Utah DFI as they scrutinize our applications for Square Financial Services.”
A Square spokesperson said conversations with state and federal regulators demand been “constructive” since July. To answer any lingering questions, the start-up beefed up areas of the applications where regulators were looking for sundry information.
As a part of that request, Square named additional officers for the company including Brandon Soto, a old Green Dot executive who will serve as the chief financial officer of Square Financial Services.
Square also develop intensified out its Salt Lake City offices, provided additional documentation on Square’s products and services, and outlined its Square Pre-eminent product offerings and the proposed bank infrastructure and governance.
By green-lighting “Square Financial Services,” regulators could be context a precedent for other Silicon Valley fintech firms, some of which have stubbed their toes on regulatory consummations.
Last week, popular stock-trading platform Robinhood announced it would offer checking and savings accounts with an eye-popping 3 percent share rate. But the accounts would not have the FDIC insurance that banks offer. Instead, as brokerage cash accounts they would arrange been insured by the Securities Investor Protection Corp., which might not have been able to protect those repositories.
According to the head of the SIPC, Robinhood never contact him or the SEC ahead of the product announcement. A day later, Robinhood’s co-CEOs announced a blog post amending their original plan and said they would re-brand and re-name the accounts, which “may make caused some confusion.”
Square has partially stumbled into the banking business thanks to its popular Cash App. CEO Jack Dorsey, who also peter out d strikes Twitter, said on the company’s last earnings call that they “fundamentally” see people using the Cash App counterpart you would use a bank account.
“They store money with us, it’s accepted anywhere Visa is accepted. They can send and make money from friends and family,” Dorsey said. While it wasn’t a goal, Dorsey said in May that it’s a be biased he plans to “lean into.”
Former Square CFO Sarah Friar, who hasn’t been replaced yet, also signaled that the peer-to-peer payment app could start looking way uncountable like your average bank account.
“Anything you do today with a bank account, you should look to the Specie App to begin to emulate more and more of that,” Friar said on stage at ReCode’s annual Code Commerce colloquium in New York.