Square Banking: reseller training

Jeff (Square): Hello everyone. For those of you who don't know me, my name is Jeff. I'm a banking SAMPS member supporting the best product that Square offers. We're fantastic at point of sale, we're fantastic at a lot of things, but nothing gives access to cash flow, the number one most important thing a seller needs, quite like this product does. So we'll be breaking down how it works and what offerings exist, and then of course go over some talk tracks, with some time for Q&A as well.

So, number one: why are we talking about Square Banking? The reason is, again, instant access to pretty much all of your cash flow. With Square Checking, you can gain instant access to all of your daily sales through the point of sale and your Square Online store, and we'll even get into some ways you have instant access to third-party delivery partners as well, like DoorDash, Uber Eats and Grubhub. You can't beat it, right? If every single time someone made a transaction with me I had it instantly available to spend on my debit card, that would be an amazing way for a business to run and operate. You can have up to five debit cards for each location, so if you have a significant other, a general manager or a restaurant manager, you can give multiple people access to spend out of this account. And we're talking: a payment is made, and $100 is in your account within a moment. So again, you can't beat that access. You can also pay your bills directly through it. It has its own account and routing number, and its own statements and reporting.

We also have loans, right? We started with a good appetizer with the checking account; now we've got the loans, the meat and potatoes. This is access to cash in a quick and effective manner, and you can do it when you onboard to Square. If you meet the requirements we'll discuss, once you begin processing on Square, you may become eligible for loans. This is a way to get access to funding, typically as soon as the next business day. We do not check credit. We do not run or report credit. This is a one-to-one lending relationship based on four documents, so it's very easy to get started. We're not asking for two years of P&L statements or two years of tax returns. We're not taking out liens against your personal house or your business. Simple and effective ways that we are working through these loans.

Wrapping it up, for a little bit of dessert, is the savings account. Frankly, this is the easiest product we have to pitch at Square, for two reasons. One: automated savings and budgeting. You can create folders for anything, like taxes. Who likes paying taxes, or sitting and doing the math to figure out what they're going to owe at the end of the year? Oh, crap: $1,000, $5,000, $10,000. Why not just take sales tax, create a folder for it and pull money into that to accrue interest over the course of the year? It also has its own account and routing number, and it will instantly transfer between checking and savings. We're talking the next page on your computer loading, and $10,000 is available in your checking account. You're standing in the store, ready to pay. Boom, you're ready to rock.

And then for future consideration, we are on our way with the Square credit card: super sleek, matte gray, an American Express branded credit card. The more that you spend, the more that you save in processing. As you all become more and more familiar with Square: we believe in owning both sides of the transaction. We want Square customers purchasing from other Square customers, and Cash App customers purchasing from Square customers. And a Square credit card where your rewards go back into your business is just a great way to keep everything in the same world and sphere.

I also forgot to mention one thing for the checking account: Bitcoin. So if you're a Bitcoin fan, we are also accepting and allowing sellers to purchase Bitcoin through the Square Checking account as well, with no additional fees. And I want to say we went as far as: if you are accepting Bitcoin, there are no transaction fees associated with that as well. That's probably super, super into the weeds, if you ever have someone mention it, and we are also still getting ourselves ramped up with it. But if you're looking to eliminate these, make all of your customers use Bitcoin. Technically you can run your business with just the normal SaaS as well, but you won't pay any more processing fees, et cetera. Again, that's going to be a choice use case for 2025, but perhaps by 2035 we'll all be having a conversation where we're all actually transacting in Bitcoin. Beautiful.

Let's jump to the next. Why do you want to be talking about Square Banking? It has the highest rated score of all products that exist at Square. This is absolutely not to throw shade at any other products, but I started this conversation with the best product that we have, and that is also backed by data from our customers directly. Savings has a 90% CSAT score: nine out of 10 sellers say they like using savings. 87% for checking, 80% for loans. All other Square products combined come to about 74%. So again, if we're talking about creating sticky solutions, solutions that sellers like using, by the numbers this is the product to be used. Again, this creates a stickier back end. Customers want to jump on Square, they want to continue using Square, and it makes it harder for them to leave. We do a great job of getting business in; let's make sure that we're keeping that business on Square as well. All right. Any questions on any intro step? We'll start diving into the specifics here.

Mike Collins (Square): So there are a couple of questions that popped into the chat. Can you take a look at those?

Jeff (Square): (Reading a reseller's question from the chat.) If a potential client has a loan with Toast, can we take over that loan? Great question. No, we cannot take over a loan. But with what we're about to talk about right now, Mike can apply for an onboarding loan and begin processing with Square. We require a minimum of five days to get started, and then you can pay down that loan with Toast, or any of your external switching costs, contracts, debts and so on. So we're not going to take on the loan for you, but we're happy to provide you a loan to get out of that contract you have with the other provider.

Mike Collins (Square): What about the Canada question right above it?

Jeff (Square): Is this available in Canada? Yes, it is. My apologies, I thought that was a "where am I located" question. Yes, this is available in Canada as well. Document-wise it's the same, but there's a slightly different process associated with it. You don't have a Square Checking account, because of the way the Canadian government works, but Square balances and the Square card 100% do still exist. Same with the UK. I believe both Canada and the UK also have merchant cash advance. I usually stick to loans specifically, but we do also have a merchant cash advance, which is just mechanically a little bit different. But yes, this is available globally, entirely, if I'm not mistaken.

So what is an onboarding loan? The onboarding loan is the opportunity, as an existing business, to ask Square for money. You're able to upload, again, just a few documents to get started. We offer loans up to $250,000. It's a flat fixed fee, uniform across all of the loans we offer. So you are allowed to say, should a seller ask: 13.5% flat fixed fee. And we achieve the repayment through a percentage of daily sales. The more you process, the faster you pay it off; the less you process, the slower you pay it off. And if you're not open on a day, nothing is taken that day. We are not guaranteeing that you can get up to $250,000. Again, that's just the range that's set up here, for your knowledge: around 10% of GPV is usually where it lands. So if you're a million-dollar customer, you are probably going to be eligible for around $100,000.

Now, everything I'm going to describe here is for your knowledge and understanding, and I'll try to differentiate between the two. You are not allowed to discuss loan terms with customers, period. That's where our compliance stops, and it's to protect you. I don't mean to say it to scare or startle anyone, but there's a lot of compliance and certain verbiage. If you over-promise in a loan conversation, that could come around and bite you. So if you speak vaguely, or you mention the terms that are public-facing information on our website, fantastic. If a seller ever gets an actual offer and wants to talk about it in more detail during the onboarding loan process, let's just not go into the specific details of the loan.

You're always saying "you may be eligible for." Nothing is guaranteed up until the point that the loan is actually active in their Dashboard. We'll come back to that a couple more times, but I just want to make sure we're clear on what that looks like. So again, onboarding loans: these are the terms that are set up here. This is okay to talk about, because again, this is public-facing information. It's flat across all types of accounts as well.

(Reading a question from the chat.) Are cash sales considered part of the intake? No, only card sales. We do also have a way with Square Checking, which we'll get into: you can handle cash, both withdrawing and depositing. It's not the best solution, but if they're doing a small amount of cash, it certainly can work in that case. Again, we'll get to that in a little bit.

All right, we're looking at the requirements to be eligible for an onboarding loan. You need to be open for a minimum of six months. We are not doing startup loans. I don't care if you have five businesses that do $5 million each and you want to bring over that new location: we will not be able to fund that new location. If you want to bring your full business over, we can look at leveraging capital for those businesses, but since it's a location-by-location product, we're not able to extend to the new business in those cases.

They also must be new to Square. If you churned in the last year, you're not going to be eligible. If you're a current Square customer and you think, "I'm going to be sneaky and create a new Square account so I can get access to this onboarding loan," you can't do that either, because the statements you upload are Square statements, so we'll obviously know you're a current Square customer. This is an incentive product to bring people into Square. If you're at the 18-month or two-year mark, like "Hey, I used Square in 2022, and you finally did bar tabs, so I'm now interested in coming back": fantastic. We can certainly evaluate them there. I just want to be clear on the differentiation.

And there's going to be no processing seasonality. We need more or less 10 months of continual volume. If your volume drops 80% during the winter, because you live somewhere very cold and inhospitable in winter, where people maybe aren't transacting with you as much: no problem at all. That is still volume coming through. But we're talking more Christmas tree lots and firework stands, places that are only open three to six months of the year. We're not able to extend to you, because the way we're sizing this is on an estimated one-year repayment, so you do need to be processing for the better part of that year.

It did used to be a year, and I'm very glad we moved to six months, because we had a lot of people coming in just like, "We started using Toast and we hated it," and we were like, yeah, we told you that probably when you started, but you're figuring it out now. And that's the important thing. But originally it was a full year of business, and we had a lot of sellers that were really crushing it off the bat, so awesome to see that.

Now, when you want to be mentioning these loans, I've trademarked the phrase "the Trident approach." This is basically the three times you want to mention it, and the next slide will be what questions you want to be asking. You're all pros in your respective fields. How you navigate this is completely up to you, but you also understand what cash flow looks like for a business and how important it is for them.

So first and foremost: every time we're introduced to a new customer, you're bringing it up. "We do a variety of things at Square, but now we also have this fourth key pillar, which is financial services." Great, you're not interested right now? No problem, we have a lot to talk about to get started. Number two is when you're demoing the product, whether that's with SAMPS or on your own: don't gloss over the banking tab and the loans tab, and talk about what cash flow management looks like. You want to make sure you're dropping as many opportunities as possible. Actually, I need to update this: we've extended like $11 billion in loans over however many years we've had this available, so there are a lot of people leveraging this across the board. And we do have quite a way of getting this eligibility out in front of our sellers. Again, we're looking at your processing volume. We lend differently than any other business, and we are backed by Square Financial Services, which is our banking charter that allows us to offer these products firsthand.

And last but not least, of course, is stage four, stage five. You've now developed the relationship with the customer. You know exactly what they're looking for, and how much all of this is going to cost to switch. You now have the rapport to say point blank: this is the only time you're going to ask Square for money. If not, again, you may become eligible with our Flex Loan product, which is basically the same product we're discussing, but once you actually begin processing. It might take you one month, three months, six months to see a fully achievable offer. Maybe you're going into your slower time and your volume doesn't show. You might be eligible for $15,000 in March, but you might need $50,000. Okay, why don't we talk about what you might take to get you $50,000 now, so you have it ready to rock once that busy season starts picking back up, so you can do the repairs, the upgrades, everything you want to be set up there.

No, this will not have anything to do with credit rating. This is a one-to-one lending product. We do not check credit, and your credit is not affected in any way. So should you be trying to purchase a home for yourself or a new car, or seeking a larger business loan for some other reason: this is one-to-one. We are not even placing liens on your account, regardless of the amount. So again, you're not being tied up in any way by moving forward with this type of offering. I have a lot of people say, "I have absolutely terrible credit." Believe it or not, I don't care, which is quite remarkable. But people who are bad with their personal credit tend to run pretty good businesses at the same time, as it is their entire livelihood. So it's a good opportunity to be having that as a selling point as well.

All right, next are the questions we're going to use to increase loan interest. These are the types of questions you're already asking, certainly, but let's ask them in a way that uncovers pain points around capital. What plans do you have for the upcoming year? You're expanding. You're opening a new location. You're a food truck that wants to become brick and mortar, or a brick and mortar that wants to move into catering. Catering has been really hot this year for quick-service restaurants specifically. There's a variety of things you could have coming up, but this is where you identify something that costs money.

Ask the next question: how are you planning on paying for that? Do you have the money on hand? Do you have a line of credit? Do you already have a banking relationship and an offer on the table? Do mom and dad pay for stuff like this? Do you have investors? Asking what's going to pay for the project is a great way for them to say, "Oh, I work with my bank most of the time." Fantastic. How's working with that partner? "I hate my bank. I hate the way they do interest rates. They're very unresponsive. They always offer me something I don't necessarily want or need, and I can tell I'm a very small fry compared to the customers they prefer to work with."

So asking these questions uncovers the pain point: you're doing this because it's the only thing you know, because you don't know how else to get other levels of funding, and you don't like the process that exists there. Last but not least is asking about the timeline. How quickly do you need these funds? "Oh, this is something I was hoping to do at the beginning of the year, but I might need to wait till April." Okay, why is that? Because you know it's going to take a lot of paperwork, a lot of time, and interviews with the bank or the SBA or anything like that.

The timeline is where we really win. If Mike hops on with me right now and says, "You know what? I might be down to rock with this before the end of the year," I can get you funded in full by the end of the year. If you're starting to process with Square, it takes about three to five business days for us to review the documents. You receive a contingent offer, contingent on you bringing your volume to Square. You can then start processing as soon as you want, and once you hit that five-day minimum, the loan will populate in your Dashboard. You can apply for it, and you can have it the next business day, or instantly with Square Checking.

So again, if we're talking about these types of questions, not only are we uncovering needs and pain points, but now we're identifying and creating an actual solution that says: I could accelerate your revenue by letting you get access to this money quicker, so you can purchase that property you were looking at. You don't need to wait and maybe lose to the highest bidder in a couple of months. You can jump on those opportunities right now.

So, the onboarding loan process. This is a lot of words, and I'm sorry that it is, but this is how we're going to get everything set up in the cleanest, most concise way possible. Canada and the UK: you have a slightly different process. It's just not automated through this link; you basically have an email template, and you're still going to pull more or less the same documentation we're describing. So again, I'll make sure you get that specific stuff here in a moment.

There are two different scenarios for the onboarding loan: you're either a single location, or you have multiple locations you're looking to bring on. Again, this is a location-by-location product. You can send the onboarding loan escalation link. Basically, they need to create an account, activate processing, and then upload the documentation: three months of their most recent card statements (we're in December, so September, October and November) and their most recent 1099-K. That's basically a third-party credit card transaction tax document. It shows month by month how much you did in credit card volume, so we see what you do in a typical year, and then where you're currently trending.

As we approach the beginning of the year, we say "most recent 1099-K" for a reason. You may need 2023, you may need 2024. You may not have 2025 available until March; they're usually sent out at the end of January or early February. So for the first quarter, quarter and a half of the new year, we may need to request the 2024 one. It doesn't matter: we're really looking at where you're trending versus what you typically do.

Step two: you receive that contingent offer email. It's contingent on you bringing your full processing to Square. As I mentioned earlier in this: you are not saying you are eligible for... you are approved for. You're not approved for shit. You sent me four documents, and I said this is what you might be eligible for. So for us to actually extend that eligibility, we need you to begin processing on Square. We need you to hit the minimum threshold so that you actually see the offer in your Dashboard, and then you need to submit an actual formal application. It takes about five to ten minutes, really just verifying that you are in fact the person who can apply for this loan: business and personal information. At that point, it will populate in your Dashboard. So again, contingent on you bringing your volume to Square: the more vague that you can be, not to be weird or misleading, but the more vague you can be about what the actual eligibility looks like, the better it's going to be for you, and the easier the seller experience.

And if they ever want to go more into the weeds, so they don't like that type of response, that's where you bring us in. Because we work for Square Capital LLC, and you do not, we can go into the specifics, because we act as more of a legitimate banker in this conversation. We can go into the weeds, talk about the offer, and also explain to them why you were unable to share that information with them. Again, that's for your protection in your roles, based on what the product itself is.

Schedule time, and get us involved once that offer actually comes through. We then confirm and establish a go-live date, which again is five days minimum of processing. We're really just auditing what they're doing and making sure they're within the threshold to apply. It will then populate automatically in their Dashboard, and they'll receive an email. You'll be excited about it, they'll be excited about it, ready to rock. Once it populates, they can go ahead and apply: again, five to 10 minutes verifying personal and business information. It typically takes one to three business days to fund. "As soon as next business day" is how we advertise it, but just to set expectations, one to three business days, or instantly with Square Checking.

Again, the word "instant" is going to be the most important thing we hear when it comes to the Square Banking ecosystem. Square Checking plugs in and gives you instant access, a direct feed, at all times. So we definitely love to see that. All right, lots of words again on that. Do we have any questions on what the onboarding loan process looks like? It usually takes a couple of at-bats to find your stride with it.

So that people are also aware: we may request additional documentation. You submit the original documents, and part of the reason we're not guaranteeing anything is that we may need more from you in order to move forward. Even after you've received your contingent offer, you might take out three loans against your business, and now we're fourth on your lien list. We're not going to lend to you anymore. As long as the business maintains the same trajectory and keeps operating the way it has, this is usually a very clean process. But a lot of people do loan stacking, where they apply for a bunch of loans at once so their credit doesn't change. If we see that happen, we identify it as a risk factor. That's just a little background context.

A couple of important reminders. I've said it a couple of times, but it's bold and capitalized for everybody: loans are not guaranteed. Anything can happen from the point you begin this process to the end. We want to fund you, but if your business changes, we will not lend to you, because now the variables have changed. You have 30 days from the point of receiving that contingent offer to get started. Presumably nothing is happening during that time, but if anybody ever has questions, you can always pass them to us, and we can go into more detail on what that looks like. In a way, I actually prefer that you do. Everybody wants to take care of everything themselves and minimize the number of calls and people the seller is talking to. All fine and dandy. But if you find yourself getting stuck, let's get those kicked over as soon as possible.

No numbers, no steering, no lending advice. That is my job, not yours. All I need you to do is get sellers interested and applying, and then we can slam it home for you after the fact. And always feel free to say "I don't know," because if you don't know, I do. I've been doing this now for four and a half, five years. I know more about the banking product than, I think, the people who work on the product. And if I don't know, I know where to go to find the answer, because Slack is basically my new social media, although I don't like that either. But you know, it is what it is. We have the answers for you; we definitely know where we can go with all that information. So I just want to make sure we're dropping on that.

I did mention and allude to it: the Flex Loan. "Flex" is flexible repayment, the short term for it. It mechanically works exactly the same. Technically, an onboarding loan is a Flex Loan, just with a little "Hello, my name is onboarding loan" sticker on its chest. Here, your volume will start automatically producing offers in your Dashboard. In a way that counts as pre-eligibility, but you do still need to submit a formal application to actually become eligible.

(Reading a reseller's question from the chat.) What do we get for sending a merchant to you for this loan? I mean, you get a high five from me immediately. To be honest, I'm actually a little bit unfamiliar with how your comp works. Mike, do you happen to know if there are payouts for loans of any kind?

Mike Collins (Square): So the answer is no. And that's funny: I'm sitting here fielding a bunch of text messages about this. So let me regurgitate the why behind this. In the beginning, when we were putting together this compensation structure, our finance team was actually the one pushing back on me and challenging me that we should be sharing in the SaaS revenue on these ancillary products. And I disagreed, and I'll tell you why. Ultimately, even when we played it out and modeled it, all they did was reduce the credit card residual to then give you a share of the SaaS. And there's no model on this planet where it will ever make sense for you to take a reduced hit on payment residuals to capture SaaS, for a couple of reasons. One, the fees Square charges for some of these ancillary products are just super, super minimal; that's probably the biggest one. So taking a 20% hit on your payment revenue to gain even 50% of the revenue on SaaS simply does not make sense.

And for those of you who know me and have worked with me: I've done this exact thing in the past, where you had a slightly lower split on payment revenue than you do here, and a high split on SaaS. Every year we'd do these annual reviews, and I've done them with some of the folks on this call: we'd go over your residuals and what you made last year. Most of the time, a single-digit percentage of your overall residuals came from SaaS, and 90-plus percent came from payments. So it's more than just my opinion that this is a smarter compensation model. The math doesn't lie. That's why we went to market like this, with the highest possible split we can get you on payments, because we all know on this call that's where the lion's share of the money is made.

That all being said, I agreed in that conversation, which was last March, that a year from then we would be able to reevaluate this and see if I was right, and whether it's still the right financial model for the resellers. But I also made it very clear in those meetings with our CFO: look, if you really want them going out and pushing the banking products super, super hard, dangle a little carrot and pay them some money. And it can't be in the form of a one-time bounty of a hundred bucks; nobody's getting out of bed for that. It has to be in the form of recurring revenue. So anyway, there's the long-winded answer to that. Sorry for stealing some time here, Jeff, but I literally typed that same thing to like five different people, so while we're on, it's probably good timing to address it.

Jeff (Square): Yeah, no, all good. And while I love listening to myself talk, it's always good to break it up with somebody else. And definitely feel you on that. So yeah, to your question there: not at this time. Now, one thing I do want to mention here is, although you are not compensated to do it: it's hard to be in y'all's position and be told to talk about products that are not going to get you paid. And I hear that loud and clear. Do not get me wrong, I've been banging on the door for years.

The important thing to remember is going back to those earlier slides. Square is a phenomenal point-of-sale product; we all believe that, we all see that. That's literally why we're sitting here having this conversation. The important thing to remember is that our differentiating products involve the banking and the payroll and everything, all the other SaaS that Mike was just mentioning. Those are things we do want to keep in mind and still ask questions about, because it may be easier to bring over sellers than you might think. And if you ever find yourself getting caught up, like, "Well, damn, I'm just going toe to toe with Toast, with Clover, et cetera": they aren't offering a suite like this whatsoever. And you may not think they want to leave Chase or Bank of America or anything like that, but once you start asking them about their cash flow and the constraints associated with it, that's where they're like, "Oh, well, dang, you guys are pretty comparable to Toast, but I do want to have access to my cash faster." Boom, instant win. That's where you're getting paid, right? You're getting paid on that volume coming through. Let's just make it an easier solution to actually move that forward. So there's a little plug there as well.

But man, I just continue to hear that we're not paying people to sell banking, and I'm just like, I don't know why I'm working so hard trying to tell all these people to talk about things they're not going to get paid for. Thank you, my friend. But we will continue preaching the good word, because again, it is the best product we have here, and you can't beat instant access to anything. All right. Next. Oh, my God. Look at that.

Cash flow is critical. 82% of small businesses cite cash flow concerns as their primary issue; all other reasons combined make up 18%. So you're able to graduate college with honors at a certain level just by introducing better cash flow to your sellers. So if you have any customer dealing with anything in their business, it most likely has something to do with cash flow. It has something to do with the way they're running their business. It's about paying their vendors, the razor-thin margins out there in the restaurant world, and making sure inventory is constantly stocked so they can keep selling. What if we can create a solution that lets them access that funding more effectively? Bringing people onto Square, and offering something that keeps everything not only in one place with one login, but lets them access their hard-earned money faster and more effectively.

So, how we're positioned today: we're empowering busy sellers to easily understand and control their cash flow by facilitating proactive, smart financial action, all in one place. Convenience: it's plugged directly into your point of sale and your e-commerce store. There's nothing else you need to do other than enroll and get it set up. Next is free, 100%. No overdraft fees. No maintenance fees. If you're saving a seller $15 or $30 a month because they have some maintenance fee set up with Chase Business or whatever, that's real money. That's a whole meal for them and one other person. They can reinvest that back into their business in a meaningful way over time. So always keep in mind that these are 100% free to use. You can transfer money in and out. This is a tool that lets you access your money more effectively. We're not nickel-and-diming you for this. We make our money elsewhere; we provide other services that take care of you there.

And last but not least is speed. Did I say "instant access" enough yet? There's more to come, folks. You can't beat instant. If you've got money coming in, it lands in your account and you can spend it immediately. You can budget in real time: raw ingredients, 20% automatically held; payroll, 10%; taxes, 10%. Everything in your checking account is now ready to be spent on whatever you want. And when your vendor walks in the door and you're like, "Oh shit, I forgot to transfer out of savings": no one-to-three-business-day transfer. It doesn't matter if it's the weekend. A couple of button clicks, and as you see the guy walking up to get you to sign, you're transferring everything. Boom: Bill Pay, here's the confirmation, $10,000 just got sent to you, have a great day, thanks for stopping by. The way that all moves around is 100% a powerful solution for all customers, especially in the SMB space.

A lot of larger customers are deep in the banking world. That's fine: they can consider this a supplemental product. We have ways to set up recurring transfers out of that account, so you can keep using your primary checking account. But what happens Thursday night, Friday, Saturday, Sunday? With a next-business-day batch, you're not getting any of that until Monday morning, and then you're reconciling everything that day. What if you just had access to all of your cash flow, and you're like, "Great, we have the $5,000 we need for Monday. Let's start thinking about other things than just getting from day to day"? This helps you forecast and budget in a more effective way.

Mike Collins (Square): I've got to jump in real quick. I can't count the number of times over the years that operators have complained about batch times for next-day funding, not hitting the cutoff and getting their money two days later, and even losing deals over it. I've seen deals lost over this, because the operators just aren't good at managing money and can't survive without next-day funding.

This is such a humongous value proposition to bring up in a sales presentation. I think this one feature alone should be able to not only win extra deals, but get your foot in the door so much more often, by being able to talk about having instant access to money and funds. I just wanted to jump in on that, because for so many years now I've been hearing about people losing deals over funding times, and being able to solve for that, for nothing, is pretty freaking cool.

Jeff (Square): And hey, as we're talking about there: we're not talking about a one-for-one tit for tat, you pitch this, we pay you this, right? We're talking about actually creating an ecosystem of solutions that allow people to access their money more effectively. We do a lot of amazing things out here at Square. Square Banking is the tool that allows you to get all of that expedited, and you have more control over everything you spend and save and automate, and just generally run your business more effectively. Thank you very much for the plug; that got me real hyped. As you can tell, I'm a fan of the product. And if your seller is on the fence and you need someone to really come in and take care of it, your boy is ready. All right, let's keep moving.

Now, how do these complement each other? I've mentioned a couple of things: instant access, which I've mentioned a couple of times, so we'll start with that. No fees, and simplified reporting, all in the same dashboard where you can view your money. We have account and routing numbers; that's US only at this time. But again, with my international folks, you are still able to facilitate your money and transact; I just don't think it has a specific ACH transfer ability right now. FDIC insured up to $250,000, again US only at this time. You can withdraw from ATMs: there's no fee on the Square side, and you can pull cash out with the Square card. The ATM fee may apply, unfortunately, but we're not charging fees ourselves. You have safety with card lock and two-step verification, and you have Square Bill Pay. Square Bill Pay, of course, is uploading vendors. There are manual and automated ways of doing it, and it lets you transact in real time from your Square Checking account. It basically acts as a bit of an accounts receivable. It's not quite as robust as, say, QuickBooks, but depending on how complex your situation is, you may not even need that, so you're also decreasing other fees and other logins. I've even had people say, "Maybe I don't need an accountant anymore." I'm not going to advise that; that's probably crazy. But you have the opportunity to really take control of your business with this as well.

Moving over to Square Savings: we have a 1% APY as of the beginning of this year, which is unfortunately not as sexy as a personal high-yield savings account, but it is double the national average for a conventional bank, a little over double. So money that's sitting there is earning you interest. If money isn't sitting around making you money, you're wasting an opportunity to generate more revenue for yourself. You can automate and save with every sale; I was talking about that a little bit as well. If you take all of your fixed expenses and create savings folders, you never have to worry, "Do I have enough money for this?"

You're not doing things by hand. You're not crunching math at the end of the day, the week or the month. You have everything ready to go. So even if there's a discrepancy, we're talking maybe a couple hundred dollars, not a few thousand. Margins are already very thin, so let's keep that automated and effective. You can organize those funds into folders. I mentioned, of course, instant transfers to and from checking, still free, and it still has its own account and routing number. FDIC insured up to $2.5 million. It's a different type of account, so it actually has a higher insurance rate for those savings-related accounts. And, as I mentioned, it's already the number one customer-satisfaction-rated score in all of Square, at 90%. And then, of course, we talked about instantly going back and forth between the two.

(Answering a reseller's question: can a merchant use card sales in Square Checking right away, for example to write a check?) If a merchant has credit card processing and a bank account with Square: 100%. They could write it at 2:15 a.m. should they need to. You have everything coming through, as long as it's processed by a credit card. I do not believe that cash... well, I guess cash technically would be in person, but it's not available in Square Checking if it's cash. But if they transact and $100 is ready there, and they need to write a $100 check 10 minutes later, they 100% are able to do that. No problem at all.

Keeping on here: a couple of questions you're going to be looking to ask. We'll breeze through these a little bit, but you can paint the picture, as Mike was just alluding to, of how it makes sense for you to introduce this. How are you keeping track of your business spending? What are some of the pain points you have with your current banking provider? "They're not innovative. They don't care about me, because Chase only wants to work with large customers," et cetera. Do you currently pay fees for your banking? Again, we're talking about eliminating fees. So in the grand scheme of things, you're looking at the total cost of ownership, dropping an extra $15, $30 off. Maybe they accidentally overdraft because they're waiting for money to transfer between accounts. What if we just close those loops and don't charge you to do it? You have the opportunity to move that money around a bit faster as well.

So again, just some opportunities to introduce what checking might look like, but really asking them about their cash flow. How important is cash flow in your business? They're going to say it's the most important thing, 82% of the time, as I showed at the beginning of this. And then you're going to say, "When do you receive your money, typically?" And they say next business day. And it's like, well, that's not the fastest you can get it. And they'll say, "What do you mean?" And then you can drop this on them as a potential opportunity. You can still use that external checking account, should you want to; we have ways to get money into that account on a next-business-day basis too. But you can't beat instant. You can't beat saying that.

For savings: do you pay taxes? Yes, everyone does. And if you don't, you're a criminal. So make sure you're paying your taxes, and make sure your sellers know they have better ways to save and prepare for that. Again, savings is the easiest product we have available at Square, and that's important for a reason that I'll share in the next couple of slides. Is there anything you're working towards, business goals? How do you save and prepare for that? We alluded to that in the loan conversation, but "How do you save and prepare for that?" is a great way of going there. A lot of people don't think they have time to save, or they spend all of the money they have. 1% of your daily sales could pay dividends at the end of the year: "Hey, now I have an extra $3,000, $5,000." Maybe I host a small holiday party for my team. Maybe I can make an upgrade I wasn't originally expecting to make, because now I have a little extra money saved at the end of the year. It never hurts to create a savings goal, and you can start as small as you want. I think they say with 401(k)s, you should always hit the match, and then every year you should try to increase a percent.

You make a little more, you start earning a little more. You're saving towards future goals. As long as you're building that automated habit, you can increase the dividends, and the way it affects you and your business, over time. How are you organizing your money? Again, I've mentioned budgeting a few times. It's currently underutilized in the stack we're talking about within savings. If you have fixed expenses, just pull the money out of your account; you can always move it right back into Square Checking instantly. If you know you spend 15% on burger patties, burger buns, tomatoes, lettuce and cheese, why not pull that money out of your account, and then every week transfer it right back in and pay your vendor when they arrive on site? You can do it all in a couple of button clicks, and any money that's left over is also earning you interest.

And then of course: do you have an emergency rainy-day fund? If you don't have money on hand in the event of an emergency, you're setting yourself up for failure. We all hopefully have this in our personal lives, and you've certainly worked with customers of all kinds who have experienced something like that. Not having cash when you need it is detrimental that day, and could have residual effects as well. So always make sure you're asking questions around how cash is moving through their business. What are you doing to take care of yourself in that respect? What if we can help automate a lot of that for you, and give you instant access to it?

(Answering a reseller's question: is there a limit on checking or savings accounts?) Checking is one per location. So if you have three locations, each will have its own checking account with its own pool, and you can transfer money between the accounts should you want or need to. Square Savings is a merchant-token-level product: all three locations can pull 10% of their sales for taxes into one big savings bucket. So checking is unit-specific; savings is at the merchant-token level.

(Reading another reseller's question: does banking let a business open multiple accounts?) Along the same lines as the question before: yes, you can open basically as many accounts as you want. But as I was just describing, if you have one merchant token with multiple locations, each location can have its own checking account, up to five debit cards per location, with Bill Pay set up accordingly, and Square Savings is your merchant-token-level product. If you have three accounts with Square that are each their own individual location, each can have its own checking account, and each can have its own savings account as well.

We are in the homestretch, folks. (Reading a question from the chat.) Thank you very much for the... the longer we process, the larger the loan option? Yes: time on Square and volume are going to help with the Flex Loan product once you get onboarding loans. Since we're only doing the last six months, technically, if you've been open for like 12 years, I think it's like a risk variable, but I don't think it necessarily will increase your offer size. We are looking more prominently at volume, generally.

Just dropping a few things here, if we're looking for specifics. I'm sure a lot of people here are hungry hustlers in the restaurant space, and as you know, with Square that's kind of our bread and butter. These are basically various use cases, and how each of these products is helping these individual industries, as stated by our customers: the checking, the savings, the loan. The credit card is in beta. We do have that available; it's currently invite only. We'll probably roll it out, hopefully by the end of Q1. It became our primary push towards the end of this year, so I'm really hoping we get that pushed ASAP.

(Answering a reseller's question: can an onboarding loan pay for Square hardware?) I cannot buy your hardware. You have to begin processing on Square in order to receive the loan. So if you're going to receive that contingent offer, let's get you onto Square. Don't change your business. The onboarding loan's underwriting and verification will ideally rule out any red flags that we wouldn't lend to. But you will need to pay for it yourself, put it on a credit card, whatever, and start processing for five days. Then when you receive that loan, you can of course pay yourself back for it. But I am not going to buy your hardware, if you're looking for something like that. We do also have hardware financing, if I'm not mistaken. That's a completely different entity.

Mike Collins (Square): Yeah, that's all I was going to chime in on for that one: hardware financing is an option. Hardware financing is an option during the checkout process.

Jeff (Square): And if a seller is interested in what I was describing, we can absolutely move forward with that. But we are not going to purchase it, similar to "are we going to take on a Toast loan?" No, but I will [lend to] you, and then you can pay it off, certainly. Again, a great conversation to bring in. If your seller has questions about it, we can walk through it step by step, just to make sure we're super clear on that.

All right, the most important part of all of this, which we're talking about right now, is Instant Payouts. Mike came in and chimed in with a beautiful piece about how Square Checking and instant access to funds can help your business run more effectively. That's great, but we're Square: obviously we offer something like that. Within Square Checking, we announced this earlier this year, and I do not know how we're doing it, but I know it is the most powerful cash flow management solution I think we have to date. If you are a restaurant (I believe technically there's some retail on DoorDash and stuff like that now too, but restaurants): if you're walking into a place and you see the tablet farm, you see anything about third-party delivery, ask them about the experience of working with those companies. They most likely hate them. And if any of y'all have ever worked for a company like that before, you probably left because you hate them. Great for what they are, great for what they did over the past five years, but they are holding 20 to 30% of sales, and it takes them seven to 10 business days to pay their customers.

And we were talking about needing funds next business day. What if I could give you DoorDash, Uber Eats and Grubhub instantly, if you have Square Checking enabled? I'm going to say that one more time. If you have DoorDash, Uber Eats or Grubhub, not in the Square ecosystem, but you have Square Checking enabled and you have those turned on in your Dashboard, you can receive those funds instantly. It's not 100%; usually it's like 90, 95%. Then we wait the seven to 10 business days on our end and pay off whatever the difference is, if there are tips involved, or taxes, or whatever it is. But you get the bulk of the funding instantly, just as if somebody came and transacted at your register.

So if we're talking about not only the instant access and how Square Checking can be enabled in those respects, all you need to do is say: "What if you have all these other companies? What's your experience there? What if we could get you that money faster as well?" Well, this is true differentiation. There is no other company of any kind that does anything remotely close to this. So that's the one to punch with: not only instant access to everything you typically have, but to everything you're going to be working with through these third-party delivery partners as well. Any questions on that or how that works? Of course not, because it's a no-brainer, right?

If you're walking into your conversations and you know these customers are using it, and you're not even mentioning it, you're just wasting your time and mine. How dare you?

No, but definitely be talking about this as well. Again, each of these products has its own individual win. And coming into this next slide: these next two slides are going to be why it's important to make sure you're getting each of these pieces in. Number one: if you have more than three banking products attached, there's a 15, over 15%, chance that a seller is retained on Square. I don't know how in depth all of you are with Square and Block individually, but Jack Dorsey has been telling us to make Cash App their primary bank for three years now. Do I bank with Cash App? No. Why do I not bank with Cash App? Because I've been using Chase, and you know what? They do what I need them to do. And I'm just a pedestrian in this world. So the important thing to remember is: if you can get sellers using a banking product, they're less likely to leave. Changing banks is one of the scariest, dumbest things that could be done. I'll change from Toast to Clover to Square all day, whoever's going to offer me the best rate, no issues there. And I'm not going to change my bank: my dad banked with Chase, my granddad banked with Chase. There's no reason for me to change that, because it's what I know. We're trying to create that new thought process and lever associated with Square Banking as well. So the more products you have adopted, the better chance they have to stay. And I already mentioned that it works and it does a lot of really amazing things, so you're not just ripping something out for no reason. You're offering a better solution in a lot of ways, and it's just up to us to introduce it and make sure they're aware of how that works.

Now, why does that matter in the greater Square conversation, and how do these products work together? Sellers who have adopted checking and/or savings are eight and a half times more likely to accept a loan offer when it becomes eligible. That's insane. And the reason that happens is because they're going to be in their checking and savings dashboards all the time, and every time they pull up the banking dashboard, it'll be like, "Oh, you're eligible for $20,000," and they'll be like, "Oh, what's going on over there?" And they're going to go look at it. They're going to see four lines that say loan offer, loan fee, daily hold rate, total owed. "You have a year to pay this back." And they'll be like, "Well, damn, I can use $20,000 for blah, blah, blah, and I'm down with that. And it's automated and it's easy, and it'll automatically be available in my checking account. Hell yeah, I'm on that." No problem. So boom: now you have one, two, three products adopted, and we now have a 15% likelier chance of retaining that customer. Fantastic.

Next is going to be that loan sellers are 4.8 times more likely to convert to checking and savings. Why? Because when I'm applying for a loan, it's going to say, nice, big, beautiful green: "Do you want this available instantly, or do you want to wait one to three days to get it into your other checking account?" People are going to be like, "Well, hell yeah, I'd much rather just get it available right now." Boom: now you have Square Checking available. Now you have instant access to all your daily sales, and potentially your DoorDash, Uber Eats and Grubhub as well, and it was all thanks to you mentioning it and making sure they were aware it existed.

And last: 75% of sellers who convert to both checking and accept a loan do so on the same day. I actually jumped the gun; that was the example I wanted to use for that one, but you get my point. A lot of sellers are looking at this and saying, "Wow, if I can get instant access to this loan..." It's Thursday night, it's Friday, I want to move, I need to move on this by the end of the weekend or by Monday. And you don't have to think about whether you'll have the money available on Monday, because it'll be available in your account at 11:59 p.m. on Friday.

So again, just talking about how the ecosystem works for itself, and how it is fully integrated in such a way that makes it easier for your customers to interact with it. But at the end of the day, we're just leveraging products that Square has available. We are here for economic empowerment. We are here to ensure that our sellers are able to be taken care of and earn the money they work very hard for. And again, we make our money elsewhere, providing you other services. Square Banking is the final plug. I rest my case. Thank you all for your time.