Block has enabled Bitcoin payments across the Square merchant network, allowing approximately 4 million merchants to accept Lightning Network payments at the point of sale.
When merchants select Bitcoin at checkout, Square generates a Lightning invoice QR code and customers pay with Cash App or Lightning-enabled wallets in seconds.
Sellers can hold their funds in Bitcoin or have them automatically converted to dollars through Square’s infrastructure. The fee structure is even simpler, with 0% fees until 2027 and a flat 1% fee per transaction thereafter.
This is structurally cheaper than the 1.5% to 3% total on card payments, there are no chargebacks, and you get instant finality.
Although Block positioned the launch as a global unlock, official product documentation lists US Square businesses outside of New York as the first zone of availability.
The discrepancy between the “Global Expansion” headline and the jurisdictionally sensitive print is a smaller issue than scale. Millions of potential Bitcoin endpoints came online overnight and were routed through a single commercial hub that already operates one of the largest public Lightning nodes by capacity.
The question is not whether this matters, but how much friction it removes from the mechanism that converts everyday commerce into Bitcoin liquidity, and whether the block has simply become a central clearing node for mainstream Lightning payments.
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On paper, this is simple commercial economics. Typical card fees range from 1.5% to 3% or more, depending on the card type, exchange category, and processor margin.
Square Bitcoin processing fees are 0% until 2027 and a flat 1% thereafter. For merchants with tight profit margins, customer adoption of Bitcoin, even a small percentage of transaction volume, can quickly add up.
No chargebacks means less fraud and less operational costs, but the risk of refunds is shifted entirely to in-store gift cards and manual reconciliations.
But from a market structure perspective, 0% is not free. Block still makes money on forex and crypto spreads, which consist of 1% on conversions and trades, plus an embedded spread on Bitcoin wholesale liquidity.
Therefore, the fees do not disappear, but instead move from the card network or bank to Block’s Bitcoin stack.
It is a re-evaluation of the spread that was buried at launch. Although the price on the seller side is zero, blocks internalize spreads and flows that can tighten or reshape the retail price of Bitcoin over time.
For merchants, this perspective is compelling enough that even modest implementations can squeeze card economics to the brink. If a coffee shop or boutique can save 2% on a $50 transaction by offering a Bitcoin discount at checkout, the incentive structure begins to change.
Blocks don’t have to be switched overnight by all sellers. Sufficient activation is required to justify building your infrastructure and start routing meaningful volumes through your Lightning nodes.
The 0% fee period, which extends through 2027, is long enough to train your behavior and short enough to monetize later without appearing opportunistic.
Lightning’s Biggest Real-World Test
The capacity of the public Lightning Network will be approximately 4,100 to 4,800 Bitcoins as of late 2025, depending on channel counting methods and liquidity.
Block’s public nodes already rank among the largest, holding just under a few hundred Bitcoins and occupying about 5% or more of its visible capacity.
Enabling millions of merchants to accept Bitcoin, even if only a small subset opts in, effectively adds a huge number of potential Lightning endpoints behind a single commercial hub.
This changes the topology of the network in two directions.
- As the amount of routing through block-linked nodes increases, more liquidity competes for the same flow, which should compress the routing charges on the main path.
- Centralization risks accelerate. A large part of a merchant’s payment flow may now rely on block nodes and liquidity management. For Lightning native services, this is both an opportunity and a threat, as it involves more routes and increased volume, but Block is capturing a significant portion of the economic rent in the process.
Lightning’s $600 per transaction cap means you can’t make large purchases from the network right now, but that’s enough to cover most retail transactions. Coffee, food, clothing, books, daily services, etc. can be comfortably within limits.
As adoption grows, Block becomes the de facto routing hub for mainstream commerce, and the Lightning Network story shifts from cypherpunk experiment to Block-mediated payments rail.
That’s not necessarily bad for Bitcoin. This is just a different version of decentralization than what early Lightning proponents imagined. Hub-and-spoke networks are efficient, easy to use, and scale predictably.
But they centralize power, and in this case, that power resides with publicly traded companies that cater to shareholders and regulators rather than node operators.
Reduce spreads with closed loop
The impact on liquidity is spread across three flows.
The consumer-to-seller process requires the customer to pay via Lightning, and the seller either pays in Bitcoin or converts Bitcoin to dollars through Square.
If a seller holds Bitcoin, they become a margin holder. If they convert, Block will need to offload Bitcoin or use existing inventory to add two-way over-the-counter and venue volume to reduce spreads at the edge.
Square also offers automatic conversion to Bitcoin, allowing businesses to direct up to 50% of their daily card sales to Bitcoin. This allows Block to become a systematic buyer on behalf of the seller, similar to dollar-cost averaging for businesses.
This is slow, persistent demand that absorbs declines and does not disappear even when volatility spikes. If even a fraction of Square’s $200 billion-plus total payment volume touches Bitcoin, that equates to $2 billion in Bitcoin volume flowing through the block’s infrastructure annually.
It’s not market-destroying, but it’s enough of a problem for liquidity and spreads.
When paying with Bitcoin, mainstream users can make one-tap purchases with Cash App and pay directly in-store via Lightning. This is a closed loop from fiat to Bitcoin in Cash App, Lightning payments, Square payments to Bitcoin or Dollars, and the block touches every leg.
Shorter Bitcoin inventory cycles through Block’s system and internal netting across Cash App purchases and seller conversions could result in tighter retail spreads compared to standalone exchanges.
Cash App is already in a major Bitcoin adoption phase, with Block running one of the largest public Lightning nodes. The Seller Network leverages its infrastructure to create a native Bitcoin flow engine, not just a marketing claim.
A block does not need to move the entire Bitcoin market. In order to make Lightning liquidity and conversion spreads structurally profitable, you need to have a good understanding of your daily payment flows. This creates a feedback loop where tighter spreads attract more users, more users justify more liquidity, and more liquidity causes spreads to tighten even more.
what happens next
The actual activation rate of the 4 million merchants will determine whether this is a genuine migration or a publicity stunt.
The proportion of merchants and vending machines that hold Bitcoin will indicate whether small businesses view Bitcoin as a treasury asset or just another means of payment.
Increased Lightning capacity around block nodes indicates whether the network can scale to meet demand or meet bottlenecks around a few large hubs.
Regulatory and tax frictions remain the wild card. Adoption is likely to accelerate if the U.S. enacts a minimal exemption for small-value Bitcoin transactions and eliminates capital gains reporting requirements for routine purchases.
Without that, using Bitcoin still generates tax events that most consumers don’t care to track. Block can build the world’s cleanest infrastructure, but it can’t fix IRS codes.
For now, Mr. Block has achieved what Bitcoin supporters have been talking about for years, making spending Bitcoin as easy as tapping your phone.
Fees are cheaper than cards, payments are instant, and the liquidity loop is closed. Whether it leads to meaningful adoption depends on whether merchants promote it at checkout and whether customers are willing to make the switch.
Nevertheless, the infrastructure is up and running, the incentives are real, and spreads are starting to move. The government has not changed yet, but its foundations have just become stronger.
(Tag translation) Bitcoin
