Block has enabled Bitcoin payments through its Square merchant network, allowing approximately 4 million merchants to accept Lightning Network payments at the point of sale.
The merchant selects Bitcoin at checkout, Square generates a QR code for a Lightning invoice, the customer pays with Cash App or another Lightning-enabled wallet, and settlement happens in seconds.
The seller can keep the funds in Bitcoin or have them automatically converted into dollars through Square’s infrastructure. The fee structure is even simpler, with 0% processing fees until 2027, followed by a flat 1% per transaction.
This is structurally cheaper than the all-in costs of 1.5% to 3% for card payments, without chargebacks and immediate finality.
Block positioned the launch as a global unlock, although the official product documentation lists US Square companies outside New York as the initial availability zone.
The discrepancy between the headlines about the “global rollout” and the delicate printing issues is less stark than the scale: millions of potential Bitcoin endpoints just came online overnight, routed through a single commercial node that already operates one of the largest public Lightning nodes by capacity.
The question isn’t whether this matters, but rather how much friction it removes from the machinery that converts daily trading into Bitcoin liquidity, and whether Block has just turned itself into the central clearing hub for regular Lightning payments.
Product launch masks a reimbursement war
On paper, this is simple trade economics. Typical card fees range from 1.5% to 3% or higher depending on card type, exchange category and processor margin.
Square Bitcoin offers 0% processing fees until 2027, then a flat 1% fee after that. For a trader with tight margins, there is immediate value in sending even a small percentage of volume to Bitcoin if customers adopt it.
No chargebacks means lower fraud and operational costs, although refund risk is shifted entirely to in-store gift cards or manual reconciliation.
But the 0% is not free in terms of the market structure. Block still earns on currency and crypto spreads, consisting of 1% on conversions and trades, plus an embedded spread on Bitcoin wholesale liquidity.
So the fees do not disappear, but move from card networks and banks to Block’s Bitcoin stack.
That is the revaluation of the spread that was hidden at launch. The price to the trader is zero, but Block internalizes the spread and flow, which can tighten or reshape Bitcoin retail prices over time.
The angle for merchants is so compelling that even modest adoption puts pressure on the card economy at the margins. If a coffee shop or boutique can save 2% on a $50 transaction by offering a Bitcoin discount at checkout, the incentive structure starts to shift.
Block doesn’t need every trader to turn around overnight. It requires enough activation to justify building the infrastructure and routing meaningful volume through the Lightning nodes.
The 0% rate, which extends through 2027, is long enough to train behavior and short enough to generate revenue later without appearing opportunistic.
Lightning’s greatest real-world test
The capacity of the public Lightning Network is currently approximately 4,100 to 4,800 Bitcoin at the end of 2025, depending on the method of channel counting and liquidity.
Block’s public node is already among the largest, holding hundreds of Bitcoins and representing roughly 5% or more of its visible capacity.
Enabling Bitcoin adoption for millions of merchants, even if only a small subset signs up, effectively adds a huge number of potential Lightning endpoints behind a single commercial node.
That changes the topology of the network in two directions.
- It increases routing volume through block-connected nodes, which should reduce routing costs on key routes as more liquidity competes for the same flow.
- It accelerates centralization risk. A large portion of merchant payment flows may now depend on Block’s nodes and liquidity management. For Lightning-native services, this poses both an opportunity and a threat, as it means more routes and greater volume, but Block captures a significant share of the economic profit in the process.
The $600 limit for Lightning payments per transaction will keep larger purchases out of network for now, but that’s high enough to cover most retail transactions. Coffee, meals, clothing, books and daily services fit well under the limit.
As adoption scales, Block will become the de facto routing hub for mainstream commerce, shifting the Lightning Network’s narrative from cypherpunk experiment to Block-intermediated payment rail.
That’s not necessarily bad for Bitcoin. It’s just a different version of decentralization than Lightning’s early proponents imagined. Hub-and-spoke networks are efficient, easy to use, and predictably scalable.
However, they concentrate power, and in this case that power rests with a publicly traded company that is accountable to shareholders and regulators, not node operators.
Closed loop reduces spreads
The consequences for liquidity are spread over three flows.
The consumer to merchant process requires the customer to pay via Lightning, and the merchant to pay in Bitcoin or convert to dollars via Square.
If the trader holds Bitcoin, he becomes a marginal holder. If they convert, Block must offload Bitcoin or use existing inventory, adding two-way over-the-counter and venue volume that tightens spreads at the edges.
Square also offers automatic conversion to Bitcoin, allowing businesses to convert up to 50% of their daily ticket sales to Bitcoin. That makes Block a systematic buyer on behalf of sellers, similar to dollar-cost averaging of companies.
It’s a slow, persistent demand that absorbs dips and doesn’t go away when volatility peaks. If even a sliver of Square’s $200+ billion gross payment volume touches Bitcoin, that’s the equivalent of $2 billion in annual Bitcoin volume flowing through Block’s infrastructure.
Not market breaking, but enough to be important for liquidity and spreads.
To pay with Bitcoin, regular users can purchase Cash App with one tap and spend directly in the store via Lightning. That’s a closed loop from fiat to Bitcoin in Cash App, Lightning payment, Square settlement to Bitcoin or dollars, with Block hitting each leg.
More short-lived Bitcoin supply cycles through the Block system, and internal settlement of Cash App purchases and merchant conversions, could potentially tighten retail spreads versus standalone exchanges.
Cash App is already a major Bitcoin on-ramp and Block operates one of the largest public Lightning nodes. The merchant network leverages that infrastructure to create a native Bitcoin flow engine, and not just a marketing claim.
Block doesn’t need to move the entire Bitcoin market. It needs to capture enough daily payment flows to make its Lightning liquidity and conversion spreads structurally profitable, which creates a feedback loop of tighter spreads attracting more users, more users justify more liquidity, more liquidity further tightens spreads.
What comes next
The actual activation rate among 4 million merchants will determine whether this is a real shift or a publicity stunt.
The share of sellers who own Bitcoin versus those who sell automatically will be an indication of whether small businesses view Bitcoin as a treasure chest or just another payment method.
Growth in Lightning capacity around Block nodes will reveal whether the network can scale to meet demand or bottlenecks around some major hubs.
Regulatory and tax friction remains the wildcard. If the US implements de minimis exemptions for small Bitcoin transactions, eliminating capital gains reporting requirements for everyday purchases, adoption will likely accelerate.
Without that, spending Bitcoin still triggers tax events that most consumers won’t follow. Block can build the cleanest infrastructure in the world, but can’t fix the IRS code.
For now, Block has accomplished what Bitcoin proponents have been discussing for years, namely making it as easy as tapping a phone to spend Bitcoin.
The fee structure undermines cards, settlement is instantaneous and the liquidity cycle is closed. Whether that translates into meaningful adoption depends on whether merchants promote it at checkout and whether customers are willing to make the switch.
Nevertheless, the infrastructure is live, the incentives are real and spreads are starting to move. Although the regime has not yet changed, the foundation has become a lot stronger.
