The United States’ Federal Deposit Insurance Corporation (FDIC) has given conditional approval to Square Financial Services for launching a bank charter.
Revealed to the public on Wednesday, the new bank can write commercial loans to the merchants using Square’s services for payment settlement.
The insurance agency also detailed that applications for deposit insurance have to be evaluated under the financial structure, capital structure, prospect of future earnings, management fitness, and risk factor, among others.
With this approval, the payments company will launch its banking services in 2021, as it is required to launch the bank within 12 months of the approval.
The bank will be a direct subsidiary of Square; however, its operations will be independent of its parent.
The primary purpose of the bank will be to offer small business loans for Square Capital’s commercial lending business and to offer deposit products.
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Based in Utah, Square Financial Services also received charter approval from the Utah Department of Financial Institutions.
“We appreciate the FDIC’s thoughtful approach to our application, and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved,” Jacqueline Reses, Square Capital lead and executive chairwoman of the board of directors for Square Financial Services, said.
“We’re now focused on the work ahead to buildout Square Financial Services and open our bank to small business customers.”
Launched as a mobile-based payment platform by Twitter CEO Jack Dorsey, Square is providing merchants with card payment settlement infrastructure. With the on-going trend, the company also divided into crypto, offering Bitcoin buying and selling options through its Cash App, which turned out to be a great success.
The bank, however, does not have any plans to offer any crypto-based services.