Square is set to buy Credit Karma's tax business for $50 million cash
Payments processing giant Square looks set to press ahead with its acquisition of Credit Karma's tax division for $50 million. Following a concerted effort to beef up its popular Cash App, Square will use the purchase of Credit Karma's free-to-use tax filing service to provide the perfect supplement to its mobile application.
As previously reported, Credit Karma is currently in the throes of being purchased by accounting software giant Intuit, which owns Turbo Tax. The deal, said to be worth $7.1bn, has drawn attention from the US Justice Department. It has expressed concerns that having Credit Karma and TurboTax under the ownership of one company would reduce customer tax filing choices.
Selling off the tax unit of Credit Karma to Square following an instruction from the US Justice Department means the deal gets the green light and Square gets to add another dimension to its growing portfolio of products.
Square's Cash App service has already been expanded to offer more functionality, with customers now able to transfer money via peer-to-peer payments along with paying for goods and services. Beyond that, the Cash App can now be called upon to search for and invest in stocks, as well as allowing users to buy and sell bitcoin.
“We created Cash App to provide more access to the masses of people left out of the financial system and are constantly looking for ways to redefine our customers' relationship with money by making it more relatable, instantly available, and universally accessible,” said Brian Grassadonia, Cash App Lead.
“That's why we're thrilled to bring this easy-to-use tax product to customers as we continue to build out the suite of tools Cash App offers. With this acquisition, we believe Cash App will be able to ease customers' burden of preparing taxes every year.”
"Filing taxes is critical and challenging for all Americans, and in recent years we've seen more customers shift to filing taxes themselves. Credit Karma Tax provides a seamless, mobile-first solution for individuals to file their taxes at no cost,” said Patrick Fink, Director of Engineering, Credit Karma Tax.
“We're excited to be joining an entrepreneurial team and continue to build simple, innovative tools for Cash App customers.”