Long known for its innovations in the financial technology (fintech) space, Square (SQ  ) just snagged itself a banking charter. It's not unheard of for fintechs to take deposits or lend money. Square itself facilitated $857 million Paycheck Protection Program loans during the throes of the coronavirus pandemic.

But now armed with their new banking charter, Square can let the credit flow like never before. The question is, should PayPal (PYPL  ) and other financial technology players worry?

Square had been lobbying for a banking charter for more than four years. Last year they received conditional approval from regulators. But the ink only dried on the charter on March 1. From the get-go, Square Financial Services (SFS) will offer FDIC-backed deposit accounts and lending services to Square's roughly 2 million small business customers.

Fitted with the flexibility a banking charter provides, Square hopes to become "the primary provider of financing for Square sellers across the U.S.," according to TechCrunch.

But there is a catch-as an industrial bank Square Financial Services will operate differently than your Chase branch down the road. For one thing, Square can't offer its clients checking accounts or other banking services.

But the new bank can take customer deposits and gather third-party investments- the proceeds of which Square can then parcel out in the form of business loans. Essentially Square won't be lending its own money, but the money they raise through customer deposits and third-party investments. For this reason, the company expects the new bank will have no "material impact on Square's consolidated balance sheet, total net revenue, gross profit or Adjusted EBITDA," TechCrunch reports.

For Square, the new banking charter also allows them to cut out the middle man. Many fintechs offer loans and credit to their customers. But to do so, they have to partner with traditional banks. These banks then approve and underwrite their loans. This traditional approval process leaves many borrowers out in the cold. That's because Most businesses who seek financing from fintechs are borrowers who often fall through the cracks of our banking system- such as women and minority-owned businesses.

But the new charter eliminates the need for such partnerships and "deepens Square's unique ability to expand access to loans and banking tools to underserved populations," according to TechCrunch. In short, the flexibility provided by the new charter will allow Square "to operate more nimbly," according to CFO Amrita Ahuja, quoted by TechCrunch.

And as both a bank and a point-of-sale system, Square will "have a constant, near-real-time view into business performance and perhaps the entirety of their revenue stream" Gartner analyst Dayna Ford told CNN. These sorts of insights will help to both Square mitigate risk and speed up the approval process.

For the time being, Square will only offer banking services to its sellers. But Twitter (TWTR  ) Chief and Square CEO Jack Dorsey has a broader vision in mind. And Square's new banking charter only brings the company one step closer to becoming a one-stop-shop for financing serving consumers of all stripes.