US-listed merchant services provider Square Payments is expanding its Australian operations and workforce after deciding to double its capital investment in the local subsidiary.
According to documents lodged with the Australian Securities and Investments Commission, the Californian-based company has ploughed almost $A50 million into the Australian arm since the start of the year, which effectively doubles its paid up capital to more than $100 million.
Square, which provides online payments processing and sales management software to small merchants, is rapidly emerging as the biggest threat to the longstanding stranglehold of the major banks’ in the merchant acquiring market.
While the company does not disclose customer numbers, payments experts estimate Square’s domestic merchant base now exceeds 50,000.
"We’ve been humbled by the reception Square has received from Australia’s business community since launching payments in 2016,” a Square spokesperson said.
“Australian businesses have a huge appetite for innovation and we have seen quick adoption of our payments technology and business tools.”
The fresh capital is being used to fund an expansion of Square’s national salesforce and product development teams at its Australian headquarters in Melbourne.
In the last 12 months headcount grew by 60 per cent to 150 full time equivalent roles.
The staff expansion is to support a raft of product launches this year, which began in January with a new point of sale service aimed at retail merchants.
Square’s software-driven platform faces competition from other startups in the coming months, as several of its former senior executives, Ben Pfisterer and Dominic Yap, prepare to launch a rival business, known as “Zeller”.
ASIC records show Zeller raised $25 million from investors in the last year.
Pay Pal Australia is also believed to be on the cusp of unveiling an Australian version of its global point of sale payments network that trades under the “Zettle” brand.
Although Square has not confirmed a rollout of credit products in the near term, there is speculation in the payments industry that Square has commenced scoping work on a proposal to launch small business loans to Australian merchants.
In the US, the company markets credit products to small businesses through a fully-owned bank operating out of Utah and a finance arm known as Square Capital.
Square offers US borrowers loans of up to $100,000, most of which are funded through securitisation vehicles.
The launch of an Australian lending business might be some time away given that the company does not hold an Australian credit licence and its current financial services licence only permits it to market non-cash deposit and payments services to local businesses.
Square might also elect to delay its entry into business lending until the global funding environment normalises.
The policy responses of central banks to the economic crisis sparked by Covid-19 has made it extremely difficult for small business lending aspirants to launch products in the last year.
With major banks such as NAB and CBA able to raise tens of billions of fresh funding through the Reserve Bank of Australia at only 10 basis points, startup lenders are forced to raise funds at a substantially higher cost.