Square, the San Francisco startup that lets anyone accept credit card payments through mobile devices, on Wednesday announced it had received an undisclosed "strategic investment" amount from Visa, the No. 1 credit card company.
Square's small credit-card readers, which attach to mobile devices, already let people accept payments from Visa as well as other cards.
Keith Rabois, Square's chief operating officer, said in an interview that the companies will "explore collaborative partnerships that might make sense," adding that "their vision and our vision align."
Nick Holland, a mobile-transactions analyst at Yankee Group said the announcement was "huge" news. "Given that the largest card-processing and payment company in the world is backing Square totally legitimizes what they're doing," he said. The endorsement "from the top" of the credit-card world alleviates doubts about the security of the way Square handles payments, which was publicly criticized by a rival recently.
John Partridge, Visa's president, said in a statement that the company "invests in payment innovations that can enable more businesses to accept Visa."
More than eight million U.S. businesses accept Visa and Mastercard, Rabois said. Square is trying to help the 27 million businesses and entrepreneurs that don't accept credit cards because they haven't qualified due to poor or no credit history, Rabois said. Square charges 2.75% per transaction to the merchant or person accepting the credit-card payment.
Square was founded in 2009 by Jack Dorsey, the creator of microblogging service Twitter, and the company made its credit-card readers available for free starting last fall. So far "hundreds of thousands" of people or businesses have signed up to be able to accept payments through Square's readers. In the first quarter of this year, the company processed a total of $66 million, Rabois said, and it expects to triple that figure during the current quarter.
Square has 85 employees, up from 65 two months ago, he said.
Before the undisclosed Visa investment, Square had raised nearly $40 million, including an investment earlier this year that valued the company at around $240 million.
Earlier this year, Square CEO Dorsey took on a formal role working at Twitter, where he was CEO until 2008. When asked how Dorsey is handling both roles, Rabois said "the company is thriving and Jack is leading us…just as he always had." He added that he interacts with Dorsey the same amount as he had before Dorsey began working formally again at Twitter.
