Square has partnered with UPS to make it easier for Square merchants to access UPS's shipping services for order fulfillment. The move comes as Square position's its e-commerce platform to better compete with Amazon and Shoppify for market share.
The company could benefit in many ways if the UPS deal helps it attract more merchants to its platform. First, Square provides a suite of payment and accounting solutions to businesses that generate revenue for it through fees. Therefore, having more merchants on the network means bigger fee revenue opportunities. In addition, Square makes loans to businesses from which it earns interest. Therefore, the UPS deal could create more loan customers for Square. In addition to operating e-commerce platforms, Amazon and Shopify also extend credit to their merchant customers.