Block, Inc.: What It Is, How It Works, Products and Services

In 2009, entrepreneurs Jack Dorsey and Jim McKelvey created Square, Inc. (SQ), fulfilling their dream of creating technology capable of aggregating merchant services and mobile payments into a single, easy-to-use service. Less than a decade later, millions of small businesses use Square to accept credit card payments, track sales and inventory, and obtain financing.

In December 2021, Square, Inc. changed its name to Block, Inc. to account for the exponential growth the company has experienced since its inception and the new territories it hopes to enter. Block’s product line includes Cash App, which allows users to send and receive money for free through a mobile application; Point-of-Sale for Small Business, a free application that lets merchants process payments via smartphone; and TIDAL—a subscription-based streaming service.

Key Takeaways

• Jim McKelvey and Jack Dorsey launched Square, Inc., a merchant-services and mobile-payment platform, in 2009.
• Square Inc. changed its name to Block, Inc in December 2021 to account for its growth and increased portfolio of companies.
• Starting in 2017, the company’s Cash App began allowing merchants to use bitcoin in the technology.
• It’s point of sale service allows merchants to accept payments securely, manage inventory and customer profiles, generate sales reports, and more.
• From its IPO, Block’s stock price has grown 759% as of the end of 2023.

How Block Grew Its Financials

Block received seven rounds of private funding before going public in November 2015. Major investors included Acequia Capital, Sequoia Capital, and Khosla Partners. On Nov. 19, 2015, Block’s shares began trading on the New York Stock Exchange for $9 per share, with a company valuation of around $3 billion. On August 05, 2021, Block traded at $281.81 a share, it’s peak price as of 2024.

In November 2017, the Cash App announced a trial program that availed bitcoin trading to certain users. Then in March 2018, the company extended its bitcoin trading services to Wyoming, pushing the stock to all-time highs at the time.

On April 26, 2018, Block announced its acquisition of San Francisco-based Weebly, a website construction service and web hosting service company. It acquired food delivery service Caviar in August 2014.

Block then became the first company to own both a food delivery company and a point-of-sale service, after launching Block for Restaurants in May 2018. Caviar was later sold to DoorDash in 2019 for $410 million.

What Products and Services Does Square Offer?

Block provides merchants with a suite of services and products to help fulfill sales transactions, employ marketing tactics, and manage inventory, staff, and finances.

For its traditional payment services, Block charges merchants 2.60% of the sales price plus 10 cents of any transaction they process via swipe, insert, or tap, and it charges 3.5% plus 15 cents for every manually keyed-in transaction. Money from merchants’ transactions is typically deposited into their bank accounts within two business days.

Block offers a free set of tools that analyzes sales and customer data and creates trend and insight reports. This can be applied on top of its POS products. The company also offers an online service that lets users book appointments.

Important

To prevent fraud and identity theft, Block introduced encryption technology on its devices, which do not store card numbers, security codes, or magnetic stripe data.

Square Stand, one of the company’s few physical products, lets users turn an iPad into a complete point-of-sale tool. The company has also expanded into financing small businesses, with products like Square Loans, which provides small business loans to merchants, up to $250,000. The firm also provides complete payroll services to businesses in all 50 states, with Square Payroll.

Square Point of Sale (POS)

Square POS lets customers pay, tip, and sign on a merchant’s mobile phone or tablet and lets merchants process payments made with credit cards, gift cards, and cash. Square POS is often used with Square Reader, a small device installed on smartphones or tablets that reads credit and debit cards.

Business owners can also use the POS app to send and track invoices, customize products, email receipts, apply discounts, administer refunds, access real-time sales data, and track inventory in real-time. Users can access this information and engage in these activities by logging onto the app’s dashboard.

Block Inc.’s Corporate Profile

Block Inc., has acquired a multitude of companies, including TIDAL, Afterpay, and Cash App. Some of the company’s major competitors include Google Wallet (GOOGL), Intuit Inc. (INTU), and PayPal-owned (PYPL) Venmo.

For 2023, the company recorded total revenues of $21.9 billion, an 25% increase from the prior year. Bitcoin transactions accounted for 43% of revenues. As of May 1, 2024, Block’s market cap was $41.33 billion.

$9.5 billion

Block’s Bitcoin revenue generated in the 2023 fiscal year.

Block now has offices in several countries, including the United States, Canada, Australia, Ireland, and Japan. It boasts more than 12,985 employees as of Dec. 31, 2021, and its board of directors includes former United Kingdom’s Commercial Secretary to the Treasury Lord Paul Deighton, as well as Shawn “Jay-Z” Carter, founder of Roc Nation.

In January 2022, Block acquired Afterpay—the Australian-based buy now, pay later technology company. A 2021 study by C+R Research found 60% of customers had used buy now, pay later services. However, as of 2024, Capital One found only roughly 20% of consumers use the service. Now that Bolck merchants can offer the Afterpay to their e-commerce customers, the larger goal is to offer this service in more contexts to gain wider adoption.

Do I Pay a Finance Charge When Paying With Block?

Customers do not pay a fee when using Blockunless the merchant applies a service charge to sales. However, Block charges sellers 2.6% of sales and $0.10 for processing contactless in-person payments, 3.5% and $0.15 for manually keyed-in payments, 3.3% and $0.30 for invoice payments. Other payment types have different fee structures. Block registers purchased before August 20, 2019, have a flat fee—2.5% and $0.10—for all payment types. Block does not, however, charge for recording payments.

Who Owns Cash App?

Block, Inc. is the parent company of Square, Cash App, and other companies.

Is Block Safe to Use?

Block is relatively safe to use as payments are encrypted and the company dedicates a team of security professionals to monitor transactions. Also, their hardware is manufactured in-house and has security features built-in.

The Bottom Line

In 2009, Jack Dorsey and Jim McKelvey founded Square, Inc., which quickly became a leading platform for merchant services and mobile payments, serving millions of small businesses by offering seamless credit card processing, sales tracking, and financing solutions. By December 2021, Square rebranded as Block, Inc.

Read the original article on Investopedia.