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Report: Square testing its soon-to-be-launched free stock trading service

Financial technology payments company Square Inc. is testing out a free stock trading service, Bloomberg News reported, citing a video it viewed.

The service is being tested in Square's Cash App, a source told the news service. The exact launch date is yet to be announced, but employees have been testing the service in recent weeks.

Square launching its free stock trading feature could put it in direct competition with Robinhood Markets Inc. The financial technology company allows clients to invest in stocks, exchange-traded funds, options and cryptocurrencies without commissions, according to its website, and it offers margin trading services and access to research reports for $5 a month. Robinhood also said it will launch cash management services soon.

The source told Bloomberg that Square's free stock trading service will not offer margin and options trading.

Square's service could also compete with established players such as E*TRADE Financial Corp., Charles Schwab Corp. and TD Ameritrade Holding Corp., whose traditional model of charging fees for every trade has been challenged with a slew of online stock brokerage offerings promising lower fees and no commissions. In turn, Wall Street firms have engaged in a fee cut pricing war to attract customers.

In the company's second quarter earnings call, President, Chairman and CEO Jack Dorsey said Square intends to strengthen both its seller ecosystem and Cash App, but those require "more focus and more investment." Dorsey told attendees the investments will focus on hardware, sales and marketing.

Square declined to comment when reached out to by S&P Global Market Intelligence.