Block just turned its two biggest products into a single loyalty loop. The company’s local-commerce network, Neighborhoods, has added 30,000 more sellers, and the pitch is simple: connect the small businesses that run on Square with the tens of millions of consumers who carry Cash App, and turn a one-time purchase into a habit. It is Block’s clearest attempt yet to make the two halves of its business worth more together than apart.

How Neighborhoods works

Announced in October and now scaling, Neighborhoods connects Square sellers with Cash App customers and is built directly into Square Point of Sale and Square Terminal. The hook is a cashback loop: customers earn “Local Cash” equal to 10% of their order subtotal, up to $10 per order, on qualifying purchases with participating sellers, then redeem it on a future visit. The mechanic is designed to manufacture exactly one thing — the second visit.

Discovery, then a direct line to the customer

The network also doubles as a marketing channel. Participating sellers appear in Cash App on a map in the Neighborhoods tab, so customers can discover and follow local businesses. Once a customer follows a business, the seller can reach them directly with marketing campaigns through Cash App — a permission-based line to a following that a small merchant would otherwise have to rent from a social platform.

“Neighborhoods helps local businesses get discovered by new customers and then turn that first visit into a lasting relationship,” said Owen Jennings, head of business at Block. “We’re seeing a business’s most loyal customers come back more often and spend more.”

Why it matters

Block has spent years operating Square (the merchant side) and Cash App (the consumer side) as largely separate franchises. Neighborhoods is the connective tissue that finally points them at each other: Square supplies the sellers, Cash App supplies the shoppers, and Local Cash is the currency that binds the two. For a small business, the appeal is a discovery-plus-loyalty engine bolted onto the point-of-sale it already uses — no separate app, no separate loyalty vendor.

The strategic prize for Block is a closed loop it fully owns: every reward earned and redeemed keeps spending, data and attention inside its ecosystem rather than leaking to card networks or third-party loyalty apps. Whether 30,000 more sellers is enough density to make the network genuinely useful in any given neighbourhood is the open question — a local-loyalty network only works when there are enough participating shops nearby to spend the rewards. But the design is a clear bet that the moat in small-business commerce is no longer the terminal; it’s the relationship the terminal can create.

Written for Red Robot with AI assistance and human editing. Based on reporting by PYMNTS.