Is Square Owned by PayPal? Payment Industry Ownership Explained

Many assume Square and PayPal are connected, but they are separate companies competing in payment processing. Understanding their ownership clarifies their roles in financial technology.

Ownership shapes competition, affecting innovation, pricing, and market dynamics. Acquisitions by large corporations can reshape the landscape, sometimes reducing choices for businesses and consumers.

Square’s Ownership

Square, now Block, Inc., was founded in 2009 by Jack Dorsey and Jim McKelvey. It started as a mobile card reader for small businesses and expanded into point-of-sale systems, business loans, and cryptocurrency transactions. Block, Inc. is publicly traded on the New York Stock Exchange under the ticker symbol SQ, meaning it is owned by institutional investors, retail shareholders, and company executives rather than a single parent corporation.

Jack Dorsey, who also co-founded Twitter, remains a central figure in the company. As of 2024, he holds a significant stake in Block, Inc. and serves as its CEO. Major shareholders include investment firms like Vanguard Group and BlackRock, which influence corporate decisions through shareholder voting rights but do not control daily operations.

Block, Inc. owns Cash App, a widely used peer-to-peer payment platform, and Afterpay, a buy now, pay later service acquired in 2022 for $29 billion. The company has also invested in blockchain technology and cryptocurrency initiatives, reflecting its broader focus on financial innovation.

PayPal’s Corporate Portfolio

PayPal has grown beyond its origins as an online payment processor, expanding into a financial ecosystem serving consumers and businesses worldwide. Since splitting from eBay in 2015, it has acquired companies and developed financial products to strengthen its market position.

One of PayPal’s most notable acquisitions was Venmo, a peer-to-peer payment app originally part of Braintree, which PayPal purchased in 2013 for $800 million. Venmo has since evolved into a platform offering merchant payments and cryptocurrency transactions. PayPal also entered the buy now, pay later space by acquiring Paidy, a Japanese installment payment service, for $2.7 billion in 2021.

Beyond acquisitions, PayPal has developed financial services to increase customer engagement. PayPal Credit, formerly Bill Me Later, provides short-term financing for online purchases, while PayPal Working Capital offers small business loans based on a merchant’s sales history. PayPal has also integrated cryptocurrency buying and selling within its platform, allowing users to hold digital assets alongside their regular balances.

Impact of Ownership on Payment Market Competition

Ownership structure shapes competition, influencing pricing, product development, and expansion into financial services. Publicly traded firms like Block, Inc. and PayPal operate under investor pressure to maximize profitability, driving pricing strategies and acquisitions. This competition affects the availability of low-cost payment solutions for businesses and consumers.

Larger payment firms often acquire smaller competitors, reducing market fragmentation. While this can streamline services and improve efficiency, it may also limit choices for merchants. Regulatory bodies such as the U.S. Department of Justice and the Federal Trade Commission monitor these acquisitions to prevent monopolistic practices that could stifle innovation or increase transaction fees. Increased scrutiny in recent years has led to blocked deals and stricter antitrust enforcement in fintech.

The global nature of the payment industry adds complexity. Companies must navigate varying regulatory frameworks, such as the European Union’s Revised Payment Services Directive (PSD2), which mandates open banking and greater transparency. Compliance with these regulations requires significant investment, favoring larger firms with the resources to adapt quickly. This can place smaller payment providers at a disadvantage, limiting their ability to scale internationally.