After a lull of more than five months, merchant processor Square Inc. is resuming its attempt to obtain a bank charter.
A spokesperson for San Francisco-based Square confirmed Wednesday morning that the company would refile its application the same day. Square in September 2017 filed for an industrial-bank charter from the Utah Department of Financial Institutions and insurance from the Federal Deposit Insurance Corp., but withdrew the application in July. At the time, however, Square indicated it likely would refile at an unspecified date.
The banking unit, dubbed Square Financial Services, would complement the company’s Square Capital operation, whose services include loans to small businesses via a partner bank. A bank charter would enable Square to provide loans and other financial services directly to its merchants.
“Square Capital is uniquely positioned to build a bridge between the financial system and the underserved, creating access for small businesses to both capital and the economy,” Jacqueline Reses, head of Square Capital, said in an emailed statement. “We will continue to work closely with the FDIC and Utah DFI as they review our applications for Square Financial Services.”
The Wall Street Journal first reported Wednesday that Square was about to resume its attempt to get a bank charter. The bank would be capitalized with $56 million and provide loans, deposit accounts, and prepaid cards, the Journal said.
Applications by non-banking companies for Utah industrial-bank charters, also called industrial loan corporation charters, or ILCs, have drawn opposition from the banking establishment, which says ILCs are more lightly regulated than conventional banks. A spokesperson for the Washington, D.C.-based Independent Community Bankers of America, a trade group that strongly opposed Square’s charter application, did not respond to a Digital Transactions News request for comment by deadline.