What Is Square Really? Beyond Payments: Understanding Square as a Data-Driven Enterprise

Most analysts categorize Square (NYSE: SQ) as a payments processor or merchant services provider. But this classification fundamentally misses what Square has actually become. To truly understand what is Square in its current form requires looking past transaction processing to recognize its emergence as a sophisticated data company.

The Underrated Asset: Square’s Data Infrastructure

Square’s competitive advantage lies not primarily in processing payments, but in the intelligence derived from transaction flows. The company possesses proprietary insights into consumer spending patterns across diverse retail channels. It tracks how small retailers manage inventory decisions. It captures data on merchant payroll operations and downstream consumer spending from those wages. It understands store traffic patterns and customer support queries.

While these datasets certainly optimize Square’s core payment operations, they represent only the surface-level application of what Square has collected. The company leverages this information for:

• Fraud detection and risk assessment frameworks
• Algorithm-enhanced customer service
• Credit decisioning for Square Capital lending products
• Targeted cross-selling within its merchant base
• Direct acquisition of high-value merchants

However, operating a payments business that uses data effectively is not the same as being a data company. The distinction becomes clear when examining Square’s consumer-facing initiatives.

The Strategic Build-Out of User Profiles

Square’s transformation into a data company crystallizes around its systematic construction of comprehensive user profiles across both merchant and consumer segments. The company’s Cash App division illustrates this strategy most vividly.

Cash App functions as a peer-to-peer payment platform that has gradually expanded its feature set to include prepaid debit cards and cryptocurrency purchasing capabilities. Despite maintaining only 7 million users, the application generates minimal direct revenue. This apparent business misalignment reveals Square’s true strategic intent.

Square is methodically building detailed consumer financial profiles—what makes this particularly valuable is that Square possesses actual transaction data on consumer spending habits. In contrast, Facebook (NASDAQ: FB) and Alphabet’s (NASDAQ: GOOG) Google can only infer spending patterns through behavioral signals. Square has direct, verified insights into how individuals allocate their financial resources across categories and merchants.

The Untapped Monetization Layer: Merchant Networks and Targeted Marketing

Square’s data value multiplies exponentially when combined with its established network of merchants actively seeking customer acquisition channels. This positioning creates a unique market opportunity that neither Google nor Facebook can replicate.

Square is ideally positioned to construct a merchant advertising platform featuring granular audience targeting powered by actual consumer spending data. More distinctively, Square could measure advertising effectiveness with precision impossible for traditional platforms—tracking the complete customer journey from ad exposure through final purchase transaction.

The payment processing infrastructure enables another differentiated model: performance-based advertising where merchants pay only on conversion, with costs deducted from payment processing fees. This aligns incentives perfectly between advertiser and platform.

To contextualize this opportunity: the U.S. advertising market represents tens of billions in annual spending. Google generated over $95 billion in global advertising revenue last year, while Facebook brought in nearly $40 billion. Square’s total adjusted revenue sits below $1 billion—yet its unique data positioning could unlock an advertising opportunity dwarfing its current business scale.

The Emerging Picture

Square hasn’t publicly signaled intention toward merchant advertising products, and this analysis represents one potential application of its data assets among many possible paths. As consumer applications like Caviar and Cash App expand their user bases, monetizing these platforms through data-driven marketing solutions appears increasingly logical.

The core insight remains: Square’s genuine strategic value emerges from building interconnected consumer and merchant profiles, then matching them with precision. This data infrastructure transforms Square into something fundamentally different from a traditional payments company—it’s the foundation of a platform with significantly broader market potential than current revenue figures suggest.