Mobile payments company Square is testing out a new initiative where it will give select merchants thousands of dollars to help them grow, according to The Information.
Square — which takes 2.75 per cent or less of transactions made through its card readers — doesn’t generally make money on small purchases. However, it does make money on larger ones, so it seems like the aim of this early-stage program could be to encourage desirable businesses (ones that will see lots of expensive transactions) to use its service. Once it locks these businesses in, Square will have a solid stream of money from processing their transactions.
Think of it like a long-term investment: Square gives the businesses the money now to grow, so that it will be able to continue to reap the benefits from all the businesses’ big transactions for a long time to come.
Right now, Square is only testing the program with a few merchants, and hasn’t decided whether it will continue the program or how to structure it in the long-run, the Information’s sources said.
Business Insider has reached out to Square for comment.