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Square moves to get into traditional banking

Published 09/07/2017, 10:01 AM
© Reuters.  Square moves to get into traditional banking
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  • Square (SQ +0.5%) last night announced plans to apply for a banking license in Utah. The unit is to called Square Financial Services, and it will be capitalized with $56M in cash.
  • The company is applying to form a so-called industrial loan company as opposed to a traditional banking license. That's because parts of its business - selling payment terminals and offering food delivery to name just two - are nonfinancial, and bank holding companies are prohibited from such activities.
  • The timing could be right as Washington is currently green-lighting more new banks than at any time since the financial crisis. One remembers the howls that went up from the banking lobby when Wal-Mart (NYSE:WMT) attempted such a move many years ago. The banks eventually got their man in D.C. - Alan Greenspan - to nix Wal-Mart's plans.
  • Now read: Square: How High Can A Square Fly


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