Square, the San Francisco payments company, announced on Monday that it acquired the team behind data analytics startup Framed in a bid to bolster the larger company’s software business.
Framed’s “machine learning” technology, a form of artificial intelligence, aims to help businesses use data to figure out when their customers are engaging with a service (or at risk of leaving it). Post acquisition, Framed’s team of data scientists will work on Square Capital, the company’s merchant lending service that provides cash advances to merchants using Square’s point of sale service.
Square Capital has been one of the fastest growing businesses within the company, as Square revealed during its earnings call last week. The company
said that it made $400 million in cash advances for all of 2015, of which $150 million came in the fourth quarter alone. Square Capital has made 70,000 advances in total.
The Framed team will work on building financial models and algorithms that will help Square further determine which of its merchants it should loan money to. Sources familiar with the matter said that Square did not acquire Framed’s technology and its existing software will be shut down.
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This is the second public acquisition for Square, which was founded and led by Twitter
CEO Jack Dorsey, this year. In January, the company revealed in a filing that it bought a software technology related to credit card network connections, an issue of particular importance because Square must connect its payment system to payment networks operated by Visa or American Express.
Square has made a number of other acquisitions in the past, including restaurant delivery services Caviar and Fastbite. It also bought payments processing company Kili Technology in 2015.