- Key insight: Block has updated cards and payments technology at its Square unit.
- What's at stake: While not directly related, Block made the upgrade as Stripe closes in on deals to acquire PayPal and OpenRouter, with Block being named as a potential investor in the PayPal deal.
- Forward look: The potential Stripe deals are aimed at expanding AI as more merchants adopt advanced large language models.
As
Square, which is Block's business-facing division, has updated its Square Credit Card to enable sellers to pay vendors through Square Bill Pay. This adds options beyond cards, including ACH or check. It's also a key move to bolster Block's business-facing operations, one of the company's two major lines, along with consumer payments and Cash App, which consumers and business customers use.
"It's a credit and a B2B platform. You can pay your vendors, suppliers, rent and others … and you can do it digitally whether your vendor accepts a credit card or not," Andrea Raj, head of product for Square Money, told American Banker.
Square's card
In addition to more closely aligning Square's card with Block's other payment products, Square also tweaked its incentive marketing to include 3% cash back on Square Bill Pay transactions and 1.5% on purchases, redeemable as cash deposits into Square Savings.
The refresh is part of a broader strategy at Block to expand its business services to more closely integrate payments, banking, credit and bill management together in one platform.
Square is also attempting to address a need for businesses to manage cash positions as assets and liabilities don't always match, creating overdraft risk, according to Raj.
"Businesses face a mismatch of money out and money in," Raj said, saying Square is adding tracking of incoming and outgoing B2B payments in addition to consumer checkout at small businesses. "We're trying to smooth all of that out. What we're tracking is how businesses earn all of their income. It's no longer just funds coming through a point of sale." Square is playing from a position of strength, as the
"Block is supported by healthy operating trends across both Square and Cash App as well as ongoing execution against margin expansion initiatives," BofA Global Research said in a research note.
"Block epitomizes the secular shift toward tech-forward digital finance companies as it takes share with leading tech-enabled point of sale solutions and powers commerce and financial services monetization in Cash App, its next-gen consumer banking solution," William Blair said in a research note.
Meanwhile
Square and Stripe both sell payment and e-commerce technology to businesses, largely small to medium-size firms. While Square did not upgrade its business payments technology as a direct competitive counter to Stripe, it's also not operating in a vacuum.
Stripe is either making or is close to making two large acquisitions, with potential participation from Block in one of the deals.
Any combination of PayPal and Stripe, along with OpenRouter and a potential stake from Block, would build scale for AI at a time when payment companies and banks are investing heavily in agentic commerce. While AI agents are mostly not used to make payments, they play a role in shopping and customer service, along with internal uses to speed product development. PayPal's strategy includes Fastlane, an AI-powered product that enables payments and payment facilitation, or routing payments based on a sender's costs and timing preference. Block and Stripe have also made inroads into agentic commerce.
Stripe and Block did not comment.
OpenRouter, which is not part of the rumored PayPal deal, enables developers to research and switch large language models, including those from vendors such as OpenAI, Google, Meta and Anthropic.
Read more:
Fiserv, FIS weigh options for underperforming business units CU vendor TruStage faces 14 suits over monthslong outage Second CFPB union member placed on administrative leave Fifth Third latest target in USAA's patent war with banks
That's important because as businesses increasingly use large language models, they are becoming attached to specific models, which can be used for payments and a variety of other non-payment purposes, according to Richard Crone, a payments consultant who has researched how merchants are using advanced forms of AI.
Crone said the businesses his firm speaks with are widely using advanced AI across their entire business, making it easier to switch payment companies than an AI provider.
"Businesses are more loyal to their LLM," Crone said. "A small business can easily plug into a payment processor but not necessarily an LLM."
