Platforms Use Payments Data to Push Deeper Into Merchant Credit

Payments platforms like Block (Square) and PayPal are shifting their focus from simple transaction processing to becoming primary lenders for your business. New earnings data shows these giants are aggressively expanding their 'merchant credit' arms. They are using the sales data you already generate through their terminals to pre-approve loans and working capital. This means the company that processes your credit cards is increasingly likely to be your next banker. For retailers and operators, this changes the math on choosing a payment processor. These platforms are no longer just utilities; they are liquidity providers. Because they see your real-time cash flow, they can often offer funding faster than a traditional bank, which relies on outdated tax returns or manual applications. Block alone saw a 5% increase in its lending volume last quarter, totaling $1.5 billion in originations. However, there is a catch. This creates a 'locked-in' ecosystem. When your lender and your payment processor are the same company, switching providers becomes much harder. As these platforms lean harder into credit to offset slowing growth elsewhere, expect them to pitch you more aggressively on inventory loans and flexible lines of credit based on your daily sales volume.

Source: PYMNTS

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