Square Unveils Its AmEx Card for Merchants as Part of Its Banking Expansion

Fulfilling a promise it made seven months ago, Block Inc.’s Square merchant-acquiring unit on Wednesday announced it will offer an American Express-branded credit card to its sellers that gives rewards in the form of lower processing costs. Square also announced several enhancements to its financial services to get more of its sellers’ banking-related business.

Square disclosed in November it would be coming out with an AmEx credit card in the coming months for its merchants. The new Square Credit Card, as the company calls it, is issued by Salt Lake City-based Celtic Bank. The metal card has no annual or late fees. The card’s credit limit is “determined by the sales a seller processes through Square, growing as their business grows, and rewards them with free card processing every time they spend,” San Francisco-based Square said in a news release.

“Sellers earn $1 in free processing for their business for every $3 they spend on their credit card,” a Square spokesperson tells Digital Transactions News by email.

The product has been tested with an undisclosed number of Square sellers. The card’s interest rate “varies from seller to seller and is determined primarily by their payment-processing history, but falls in a range between 13.9% to 26.9%,” the spokesperson says.

The spokesperson didn’t reveal how the card’s revenues will be shared among Square, AmEx, and Celtic Bank. With transactions being routed on AmEx’s network, American Express is in line to get discount revenue. And, as issuer, Celtic Bank presumably has first claim on the interest income.

Meanwhile, Square said it was testing the broadening of the functionality of its Square Loans product by enabling larger sellers to repay loans “on a fixed monthly schedule, rather than through daily repayments—offering a more predictable repayment schedule—as well as the optional ability to use external data to improve loan offer size,” the release says.

Both the Square Credit Card and the new loan options are getting strong uptake from what Square calls “upmarket sellers,” merchants with more than $500,000 in gross payment volume. Square, which initially focused on very small merchants, has been targeting higher-volume merchants for a number of years now. “Since these products entered beta, 25% of Credit Card spend and 30% of originations from loans with fixed monthly payments have come from upmarket sellers,” Square said.

Square is deeply involved in assessing the creditworthiness of its merchants, according to the spokesperson. “Square is fully responsible for determining creditworthiness for the lending products we offer, including the Credit Card,” he says. “Square is in the unique position of being able to make credit decisions based on current business performance and processing data, and similar to our Square Loans offering, we will proactively notify eligible sellers of their ability to apply for a Square Credit Card.”

Currently sellers can sign up on Square’s Web site to be invited to apply.

Also Wednesday, Square said sellers using its Square Checking service can now get quicker access to automated clearing house deposits. And later this year, sellers will be able to get four additional debit cards connected to their Square Checking accounts. The checking accounts and Mastercard debit cards are provided by Sutton Bank.

Square Checking users spent more than $1 billion on their debit cards in 2023’s first five months, up 20% from the same period last year, Square said. Sellers also had more than $150 million set aside in their Square Savings accounts.