Square partners with BigCommerce for anonymized transaction data to pre-qualify more merchants for loans
Context & Ripple Effects
Square has been building toward this for two years: after partnering with Utah's Celtic Bank to originate loans at fees of 10–16% of the amount borrowed, it moved in mid-2016 to expand lending beyond merchants on its own payments platform. By that November it was processing 35K+ business loans worth about $208M in a single quarter, up 70% year over year.
The BigCommerce deal is the next step in that sequence: instead of waiting for merchants to come through Square's own card readers, Square imports anonymized transaction data from a third-party e-commerce platform to pre-qualify borrowers. For BigCommerce, whose funding rounds were pitched around helping retailers sell across marketplaces, the partnership turns its merchant data into a distribution channel for someone else's credit product.
First-order effects
- BigCommerce merchants gain a pre-qualified path to Square Capital loans they didn't apply for, while Square gets an underwriting funnel that no longer depends on its own hardware being at the point of sale.
Second-order effects
- Other e-commerce platforms face a choice between striking similar data-for-lending deals with Square or rival lenders, and Celtic Bank — the originating bank behind Square's loans — sees its origination volume scale with each new data partner.
Third-order effects
- If the pattern holds, transaction data becomes the primary collateral in small-business lending: platforms monetize their merchant records through embedded credit products, and underwriting migrates from banks' balance-sheet review to whoever owns the payment stream.
The trend: Payment and commerce platforms are converting merchant transaction data into underwriting assets, distributing small-business credit through partnerships rather than branch networks.