Square has announced a strategic investment from Visa, which industry sources say is in the "single-digit millions."
Square, the startup begun by Twitter co-founder Jack Dorsey, is a mobile payment company that allows any business to accept credit card payment via mobile phones.
The partnership with Visa represents an important step for Square, which said it would help facilitate credit card transactions for more businesses and individuals who only accept cash or check. About 90% of Americans carry credit cards yet there are still 27 million businesses in the United States that don’t accept plastic. As part of the investment, a Visa executive will join Square’s advisory board.
John Partridge, Visa's president, said his company "continuously evaluates new technologies and invests in payment innovations that can enable more businesses to accept Visa."
"Square's early success suggests that using Square and a mobile device, new types of merchants will now be able to accept payment and help grow their business via Visa's global network with the security, speed and reliability we provide," he said.
In January, Square closed a $27.5 million round of funding led by Sequoia Capital in January, valuing the company at $240 million. Compared to its previous round of funding, which left the company valued at $45 million, this is a huge jump for Square.
The company uses a square-shaped credit card reader that plugs into the headphone jack of iPhones, Android phones, or tablets - which effectively turns the average cellphone into a full-fledged credit card reader.
What makes Square fundamentally different is the fact that the company charges everyone the same fee for credit card transactions, which makes the service available to more merchants.
Square has competitors in Intuit and GoPayment, as well as companies offering their own version of credit card readers that attach to phones. Of course, this opens the doors to security problems as well as fraud, a common fear among merchants and customers using mobile payments.
After launching in October, Square signs up nearly 100,000 businesses a month, according to Chief Operating Officer Keith Rabois. Just last week, Square landed a deal putting its credit card readers in Apple’s 235 U.S. retail stores.
As for Visa’s investment, Rabois added, "We couldn't think of a better partner.” He added that Visa’s international reputation could help Square expand worldwide as part of Square’s plans to double its 85 staffers by the end of the year.
Although Jack Dorsey has brought some visibility to the company, he is taking a backseat to Square as he moves back to Twitter as the company’s executive chairman.
(Via LA Times)