Jack Dorsey’s Block is offering merchants a 1 per cent payment processing rate whilst unveiling artificial intelligence research aimed at improving fraud detection, as the company seeks to challenge credit card networks and grow its stalled Cash App user base.
The financial technology firm’s new product, called Neighborhoods, helps local businesses offer branded rewards programs that consumers manage through Cash App, reports Bloomberg. The 1 per cent rate represents a significant discount from card networks’ credit card processing fees, which can reach as high as roughly 3 per cent per transaction.
“More and more sellers are getting frustrated with credit card fees for the value that they get back from it,” Dorsey, Block’s chief executive and co-founder, said during a Square event in New York on Wednesday.
Block achieved a significant milestone this month with the acceptance of two research papers at NeurIPS 2025, a world premier artificial intelligence conference, the company announced. One paper addressing two-stage classifiers received spotlight recognition, placing it in the top 3 per cent of all submitted papers.
The research tackles critical challenges for AI systems operating at scale. The two-stage classifier paper provides the first formal theoretical framework for training systems where a small, fast model handles easy cases and escalates complex cases to a larger, more powerful model. The second paper addresses uncertainty estimation in graph machine learning, particularly relevant for fraud detection in transaction networks.
Neighborhoods is designed to provide smaller shops with Starbucks-like rewards without major investment. Block will subsidise a portion of the rewards sellers offer to consumers through the program, according to Owen Jennings, business lead at Block. The strategy aims to boost engagement with Cash App after monthly active users stalled at around 57 million for the past several quarters.
Consumers can accumulate rewards when shopping at any merchant using Square terminals, with the same screens presenting earned rewards and prompting access through Cash App. The program is designed to help smaller sellers compete with larger chains offering rewards programs.
Over the past year, Block processed roughly $300 billion on Cash App, a figure which includes peer-to-peer volume that may have been transferred to an external bank account. For Square, the number one priority is to grow the volume of payments coming through those terminals, Jennings said.
The new strategy offers Block an opportunity to gain an edge over point-of-sale competitors Toast, Fiserv’s Clover and Lightspeed Commerce by tapping its network of Cash App users, according to Bloomberg Intelligence senior analyst Diksha Gera. The challenge will be convincing shoppers to change entrenched ordering habits and ensuring a seamless user experience for both merchants and consumers.
Block also rolled out its Bitcoin payments suite, allowing merchants to accept Bitcoin from consumers at checkout and convert a percentage of their daily sales into the cryptocurrency. The company holds roughly 8,692 Bitcoin on its balance sheet and hopes to make the digital asset a viable treasury strategy for the more than 4 million merchants using Square.
