Square, the massive payments platform that is slowly moving into online lending, filed a for a patent back in March of 2015 that was granted just a few weeks back (September 2017). The Patent is described as follows:
“A system and method for calculating crowdfunding terms based on a financial history of a merchant is described. The crowdfunding terms include an approved funding amount and repayment terms including a portion of transactions processed for the merchant by the payment processing system to withhold for repayment of the approved funding amount plus earnings to investors. The a payment processing system may withhold the portion of the transactions processed for the merchant by the payment processing system for repayment of the approved funding amount plus earnings to the investors, apportion the portion of the transactions processed for the merchant by the payment processing system amongst the investors, and transmit, by the payment processor system, the apportioned amount to each investor.”
What does this mean? Little really. It means that several years back Square considered a crowdfunding feature where merchants allowed investors to back a purchase at the point of sale. Kind of like instant peer to peer lending. And why not?
Square used an example of a merchant looking to purchase an espresso machine that cost $2000.00. He or she does not have the capital so he requests the payment processor to create a crowdfunding project to cover the cost. This is an interesting concept as there are plenty of peer to peer lenders around and more than a few point of purchase credit providers. Square simply sought to marry the two.
Will Square ever pursue this concept? Probably not, at least not in the near term. They are still too busy figuring out vendor loans, which is probably are far more profitable vertical.