Square takes on Affirm with point-of-sale installment loans


Shoppers purchasing big-ticket items from Square merchants will now have the option to pay via installment loans, the company said today. Square will offer point-of-sale loans for amounts between $250 and $10,000, online and offline, through its Square Capital Division.

Square is best known for serving small businesses, many of which have average transactions under $20. But a surprising number of Square merchants sell higher-value products and services, such as furniture or hair care, says Jacqueline Reses, head of Square Capital. “Over the past year, we have had 36 million transactions that match this high-priced sales profile. We see this as a significant opportunity in the Square ecosystem. »

Installment loans have re-emerged as a popular payment option in recent years. For consumers, they provide clarity by locking in a fixed monthly cost, unlike credit cards. For merchants, they can increase sales by reducing cart abandonment and encouraging larger purchases. Affirm, a startup focused on installment loans, has raised $720 million in venture capital funding and partnered with retailers including Expedia and Peloton.

Square started issuing loans in 2014, when it introduced business loans for its merchants. Last quarter, Square Capital facilitated $390 million in business loans, a 22% increase over the prior year. The average merchant loan size was within the range set by the company for consumers: $6,500.

By launching a consumer loan, Square is signaling its growing interest in serving consumers directly. Already, the company offers an app for peer-to-peer payments and a debit card. It’s not hard to imagine a credit card or other services added to the mix.

“What’s important to us is finding unique places where we have unusual access to data,” Reses says. “That’s where, in the Square ecosystem, we would want to play.”

Square’s installment loans are currently available in 22 states, with plans to expand nationwide.


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