Payment processing firm Square has acquired predictive analytics startup Framed Data to use its machine learning expertise in Square Capital financing business.
Framed Data, established in 2013, uses machine learning to help businesses predict customer engagement and specify marketing actions.
The company, which raised $2m in seed funding in 2014, will close its offering in the coming weeks. All of its employees will join the Square Capital team.
Framed Data served as an analytics engine prior to the acquisition, helping its customers understand user behavior.
It would make predictions based on user actions, like how many interactions are needed in an app prior to making an initial in-app purchase by the user.
Square is not acquiring Framed Data’s technology as part of the deal. The Framed Data product will be closed by the end of this month.
Square Capital Lead Jackie Reses said in a blogpost, "The Framed Data team will work on Square Capital, building models that allow us to further extend financing to businesses, including those that would otherwise find it difficult or impossible through traditional banking.
"This approach helps accelerate growth for underserved businesses and empowers them to increase participation in their local economies. Welcome to the team!"
Square went public in October. Its valuation declined 30% in IPO pricing, as it had been valued at $6bn, after which it dropped to $4.7bn.
Twitter co-founder Jack Dorsey founded Square in 2009 to offer businesses a detachable card reader which lets smartphones process credit and debit card payments
Square, which competes against Paypal, Google Wallet, Limpman and others, launched Square Capital, a cash advance programme for small businesses, in May 2014.
Last year, Square Capital made over 70,000 payments worth $400m.
