Dive Brief:
- Mobile payments company Square announced Monday that it has acquired the team behind Framed, an analytics startup that uses machine learning to measure customer engagement.
- Former Framed staffers will join Square Capital, a program that lends money to merchants using Square and one of the fastest growing arms in the company.
- Square Capital issued $400 million in cash advances during 2015, more than a third of which was lent in the fourth quarter alone.
Dive Insight:
Square is beefing up the fastest-growing part of its business, Square Capital, which has made 70,000 short-term loans since its launch two years ago. This is the second acquisition for Square as a public company.
Framed’s software will be phased out as the team behind it launches algorithms to help Square Capital better target and assign its short-term loans. Square cash advances are a somewhat controversial financial tool, due to the fact that the company takes daily payments off the top of the client revenues processed, effectively charging higher rates for prompt loan payoff.
The addition of Framed technology could help Square maximize profits by determining which merchant companies have the right growth curve to loan the most money to.
