updated 01:20 pm EDT, Wed April 18, 2012
Payment processor makes a big bet
Square is looking to secure a fresh injection of venture capital funding, AllThingsD reports, and has set its valuation sights pretty high for this round. The payment processing company is eyeing a $4 billion valuation, which would amount to a quadrupling of its previous valuation from less than a year ago.
Square, founded by Twitter inventor Jack Dorsey, facilitates credit card payments for small merchants, enabling them to accept pay through mobile phones and tablets. The company has seen a good deal of success, with a wide range of merchants now using its credit card readers, now available through mobile service providers.
Square charges 2.75 percent on swiped transactions and 3.5 percent plus 15 cents on keyed-in transactions, but much of that revenue goes to credit card companies for processing fees. Based on these figures, AllThingsD estimates Square's annual revenues at around $122 million. For comparison, PayPal, sold to eBay for $1.5 billion in 2002, had generated $103.7 million in its first full year before going public and had a public valuation of $800 million.
In its last round of funding ten months ago, the company raised $100 million at a $1 billion valuation. Last April, the company announced it had shipped more than 340,000 of its credit card readers and was processing $2 million in payments per day. By October, 2011, Square claimed $2 billion in annual payments processed, and the company now claims $4 billion in annual transactions. The company faces stiff competition in the payment sector, though, with Intuit, eBay, Google, and other, smaller players pushing their own payment systems.