Square takes another step into banking with a debit card for businesses

The company said it was solving a pain point for small businesses that otherwise had to wait multiple days to get access to money from a credit card sale.

“The Square card extends our ecosystem by offering instant deposit,” Alyssa Henry, seller lead at Square said on a call with reporters. “You don’t need to transfer to a bank account, which is one less thing for a seller to have to think about.”

Instead of depositing money into a bank account, then waiting those few days, the Mastercard debit card lets sellers spend that money immediately through the Square app. Sellers can also withdraw those funds at an ATM for cash purchases or expenses and see their cash balance in the same Square Point Of Sale system where they go to take a payment or see their sales records.

The company is incentivizing businesses to stay within Square’s own payments ecosystem. It offers a 2.75 percent discount on debit card purchases with other Square sellers. The debit card is not linked to Square Capital or the Cash App but that is likely to change.

For now, “there is no integration between Square Capital,” Henry said. But she said to expect more “ecosystem overlap” in the future.

Others in the payments space are paying attention.

CEO of Fiserv, which said this week it will buy payment processor First Data in a $22 billion deal, highlighted Square on its own earnings call and acknowledged the growing competition. First Data’s credit-card processing terminal competes directly with Square’s.

“A lot of banks especially in the community spaces are worried about companies like Square,” Fiserv CEO Jeffery Yabuki, who will become CEO and chairman of the combined company, said on the earnings call Wednesday. “And what do you do where Square has a growing, rapidly growing, point-of-sale lending business and that’s going to take money out of the revenue line of the banks.”