How Square Could Benefit from Its New Business Debit Card



A 2.75% discount on purchases

Square’s (SQ) new debit card for businesses, Square Card, offers sellers a 2.75% discount on purchases from other Square sellers. In comparison, PayPal’s (PYPL) rival business debit card offers a 1.0% discount on eligible purchases.

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A boost to Square’s credit business

If the business debit card and its associated discount pull more sellers to Square’s network, they could also drive growth in the company’s credit business. Square extends small business loans to merchants through its Square Capital arm. In last year’s third quarter, Square extended $405 million in loans to 62,000 small businesses. In comparison, Shopify (SHOP) extended $76.4 million in cash advances to merchant clients.

Amazon (AMZN) and PayPal (PYPL) also lend to small businesses. In 2017, Amazon revealed that it had loaned more than $3.0 billion to small businesses since it launched its credit program in 2011, and PayPal disclosed last year that it had extended more than $6.0 billion in small business loans since launching its program in 2013. Last year, Square secured a deal to lend to eBay (EBAY) sellers, thereby expanding its credit business.


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