The company has extended credit to Americans who may be excluded from affordable credit by traditional credit systems, and it has seen strong repayment behavior by these customers, it said in a Tuesday (Jan. 20) press release emailed to PYMNTS.
“Through this work, Block is proving that with the right technology, inclusive lending and responsible risk management aren’t opposing forces; rather, they’re the foundation of sustainable credit for the next generation,” the company said in the release.
Cash App Borrow, which offers short-term loans averaging 21 days and serves a customer base in which 70% of borrowers have FICO scores below 580, has seen 97% repayment rates, according to the release.
Afterpay, a buy now, pay later (BNPL) product, has seen 96% of installments paid on time, the release said.
Square Loans, a small business lending product, has less than 3% loss rates, per the release.
For each product, Block uses near real-time behavioral data rather than credit bureau reports, according to the release.
For example, the company’s internal Cash App Score for each customer is developed from customers’ earning, saving, spending and repayment patterns, per the release.
“The company’s integrated ecosystem creates unique advantages that pure-play credit companies and traditional banks cannot replicate,” Block said in the release. “When customers use Cash App for their paycheck, spending, savings and investments, Block develops a comprehensive financial picture that enables better underwriting and customer experience than fragmented legacy systems.”
PYMNTS reported in August that Block aimed to offer not only payments but also a platform where people can manage their financial lives end-to-end and where sellers of any size can operate with the sophistication of much larger players.
In November, PYMNTS reported that each arm of Block’s business bolsters the others, with Cash App users spending through Square merchants, Square’s enterprise-grade capabilities attracting larger sellers who bring customers back into the Cash App universe, blockchains strengthening lending insights, and Afterpay automating point-of-sale retail finance.
Cash App has become one of the largest consumer finance platforms in the country, home to millions of customers who treat it as their primary bank account, Owen Jennings, executive officer and business lead at Block, told PYMNTS CEO Karen Webster in an interview posted in November.
