How Block's using its license to threaten traditional bank lending

Block (the parent company of Square and Cash App) is rapidly changing the lending landscape for your customers. By utilizing its own industrial bank charter, Block has grown its 'Cash App Borrow' volume by 300% in just one year. This matters for retailers because customers are increasingly getting their credit directly from their payment apps rather than traditional banks. Block isn't looking at FICO scores in the traditional way. Instead, they analyze the real-time money flowing in and out of a customer's app to approve small, short-term loans. This ecosystem approach means more of your customers will walk into your store or visit your site with 'digital wallets' that have built-in, pre-approved spending power. As these fintech giants bypass traditional banks, the speed of approval for consumer credit will only get faster. Business owners should prepare for a world where the payment processor and the lender are the same entity, potentially simplifying the checkout process but also locking customers into specific app ecosystems.

Source: American Banker — Top News

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