The FDIC approved the long awaited bank charter application for Square Inc. along with student loan and payments firm Nelnet Bank, a move that may usher in a new era of transformation for the banking industry. 

San Francisco-based Square is one of the nation's largest payments firms, operating a widely used point of sale platform for retail merchants and restaurants and also operates the popular Cash App, for consumers. 

Square said it received conditional approval for deposit insurance for an Industrial Loan Company bank charter and also received charter approval from the Utah Department of Financial Institutions. 

The bank operation, called Square Financial Services, will mainly provide small business loans for Square Capital's commercial loan business and offer deposit products. 

"We appreciate the FDIC's thoughtful approach to our application and their recognition that Square Capital is uniquely positioned to build a bridge between the financial system and the underserved," Jacqueline Reses, Square Capital lead and executive chairwoman of Square Financial Services, said in a company release. "We're now focused on the work ahead to build out Square Financial Services and open our bank to small business customers."

Square Financial Services CEO Lewis Goodwin and CFO Brandon Soto will lead the Salt Lake City-based bank. The executives are the former CEO and CFO respectively of Green Dot Bank. 

Nelnet will operate as Salt Lake City-based internet bank franchise, offering products to students and their families. 

"We are excited to have earned both the FDIC's and UDFI's approval," Tim Tewes, president of Nelnet. "This is an important milestone and brings us a step closer to launching Nelnet Bank and being able to combine our experience and lending to help students and their families make informed education funding decisions."

"This is big news since the FDIC has been very conservative in approving new banks since the 2008 recession," Thad Peterson, senior analyst at Aite Group, told Mobile Payments Today via email. "The move to an ILC charter makes sense for both organizations."