Jack Dorsey’s Block Inc. is taking direct aim at the world’s dominant card networks with a new payment model designed to eliminate middlemen entirely.
The company’s latest initiative, Neighborhoods, introduces a system where small businesses can process transactions and run loyalty programs directly through Cash App, bypassing Visa and Mastercard fees altogether.
A Cheaper, Integrated Way to Pay
Under the new model, customers can pay with their Cash App balance, earn rewards, and redeem them at any participating merchant. For sellers, the economics are even more compelling. Block is offering a 1% transaction fee, significantly below the roughly 3% typically charged by credit card providers. To jumpstart adoption, Block will also help fund a portion of merchant reward programs, allowing small businesses to build Starbucks-style loyalty systems without the usual overhead.
“We’re giving sellers a fairer alternative,” Dorsey said during a Square event in New York, adding that traditional payment systems have long failed local merchants. The move is part of a broader strategy to connect Square’s payment terminals with Cash App’s 57 million users, effectively creating a self-contained network where money circulates and remains within Block’s ecosystem.
Building a Closed-Loop Financial System
By linking point-of-sale infrastructure directly to peer-to-peer wallets, Block could gain a powerful advantage over rivals such as Toast and Clover, while gradually reducing reliance on the credit card duopoly. However, consumer behavior may prove harder to shift. Despite the fee savings, persuading shoppers to abandon cards for wallet-based payments will require time, trust, and strong incentives.
Expanding the Bitcoin Vision
Neighborhoods also ties into Dorsey’s long-term ambition to decentralize finance. Alongside the rollout, Block has expanded its Bitcoin payment suite, enabling merchants to accept cryptocurrency directly or automatically convert part of their sales into Bitcoin. This integration positions Block as one of the few fintech firms bridging fiat and crypto payments within a single ecosystem.
“This isn’t just about cheaper fees,” Dorsey said. “It’s about financial freedom, for sellers, for buyers, and for the system as a whole.”
If successful, Block’s model could mark the beginning of a structural shift in how everyday payments flow, less dependent on legacy intermediaries and more aligned with the decentralized future Dorsey has championed for years.