Block Expands Square's Reach: Can Its Financial Strategy Pay Off?

Block Inc.’s XYZ Square is expanding its financial ecosystem to help small businesses manage cash flow, payments and financing in one place. The refreshed Square Credit Card and upgraded Square Bill Pay could make it easier for sellers to pay vendors, earn rewards and preserve working capital.

The refreshed card, operating on the American Express network, offers unlimited 3% cash back on Square Bill Pay transactions and 1.5% on other purchases. Rewards can be deposited into Square Savings, applied as statement credits or used toward Square payment processing costs.

The bigger change is the integration of the credit card with Bill Pay. Sellers can now use their Square Credit Card to pay expenses such as rent, insurance, marketing and inventory, even when vendors do not accept credit cards. Square sends vendors funds through ACH or mailed checks, while businesses can preserve cash for longer.

The card also carries no annual, late or foreign transaction fees and does not require a personal guarantee. Its dynamic credit line can increase as a business grows, while sellers can use Square sales to help automatically repay balances.

Earlier this year, Square expanded Square Loans eligibility using improved underwriting models and partnered with Homegrown to offer up to $1 million in expansion financing for eligible multi-location businesses. Overall, the Credit Card and Bill Pay combination could help sellers manage cash flow while making Square more deeply embedded in daily business operations.

How Are Block’s Competitors Faring?

PayPal PYPL has a significant small-business financing operation. In the second quarter of 2026, PayPal processed $486.4 billion in total payment volume, up 10% year over year, while revenues rose 5% to $8.7 billion, highlighting PayPal’s broad payments ecosystem and growing financial-services capabilities.

Toast TOST delivered another strong quarter, with ARR rising 25% year over year to $2.4 billion and approximately 9,500 net new locations added in the second quarter. The performance highlights continued demand for its integrated payments, software and financial technology platform, making Toast a notable competitor to Square in the small-business market.

XYZ’s Price Performance, Valuation & Estimates

Shares of Block have gained 13.3% over the past three months, underperforming the broader industry but outperforming the S&P 500 composite.

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In terms of forward 12-month P/E, XYZ stock is trading at 17.23X, which is at a discount to the Zacks Internet Software industry’s 28.85X.

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Block’s earnings estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2026 EPS has been revised northward marginally. The figure indicates a significant increase year over year.

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Block currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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