Block Adds New Incentives to Draw Customers Away From Card Networks

Some of the new features offered by Block’s Square and Cash App brands take direct aim at the fees charged by card networks, Bloomberg reported Friday (Oct. 10).

The company is offering the local businesses that use its payment network a payment processing rate of 1% on orders placed through Cash App, lower than the card networks’ fees that can be as high as 3%, according to the report.

In addition, through its new product called Neighborhoods, Block is enabling and partially subsidizing local businesses’ offering of rewards. The rewards program incentivizes consumers to pay via Cash App rather than the card networks, the report said.

During a Square event held Wednesday (Oct. 8), Block CEO and co-founder Jack Dorsey said, per the report: “More and more sellers are getting frustrated with credit card fees for the value that they get back from it.”

Block Business Lead Owen Jennings told Bloomberg in an interview that Block will subsidize a portion of the rewards offered by sellers through the Neighborhoods program and will include on the screens of Square terminals a message prompting them to pay with the rewards they have accumulated in Cash App.

Bloomberg Intelligence Senior Analyst Diksha Gera said in the report that Block’s strategy aims to change shoppers’ habits and draw the consumers using Cash App to the merchants using Square.

Neighborhoods was one of several new products and features announced Wednesday at the biannual Square Releases product launch event.

PYMNTS reported at the time that Neighborhoods is a new mobile app designed to create a neighborhood network that connects the local businesses that use Square and the consumers who use Cash App.

Neighborhoods offers sellers their own branded storefront on the open web and inside Cash App, and enables consumers to order ahead, reorder, earn rewards and stay connected.

“For sellers, it’s everything you’d want in your own mobile application—without the complexity or overhead of maintaining it across multiple platforms,” Brian Grassadonia, ecosystem lead at Block, said in a Wednesday press release.

Other products introduced at the event included new intelligence capabilities for the Square AI conversational assistant, voice ordering for Square’s food and beverage platform, and bitcoin payments.

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