Square gets $3.25B valuation, COO betting big on iPads
updated 06:46 pm EDT, Mon September 17, 2012
Square misses valuation target
Mobile payment processor Square just finished its fourth round of funding, netting a $3.25 billion valuation. As AllThingsD reports, the three-year old company raised more than $200 million for this round of funding, though it achieved a lower valuation than the company had previously sought. Meanwhile, Square's chief operating officer is predicting that Apple's iPad and comparable devices will become the point-of-sale devices of choice for most retailers over the next year and a half, a likelihood that bodes well for the mobile payment company.
Square makes software and hardware allowing retailers to process credit card payments through a tablet or smartphone. Square charges 2.75 percent on swiped transactions and 3.5 percent plus 15 cents on keyed-in transactions, though much of that revenue pays for credit card companies' processing fees. Previously, Square's annual revenues have been estimated at around $122 million.
The company initially sought a valuation of about $4 billion for this round of funding, but fell $750 million short in the final tally. Investors for this round included Citi Ventures, Rivizi Traverse Management, and Starbucks Coffee Company, which which Square recently signed a partnership agreement.
Square's COO Keith Rabois believes that the next year and a half will see more merchants moving toward mobile device-based payment processing, proclaiming that "the era of standalone machines is over.
Square isn't alone in the mobile device payment processing sector. Verifone is also looking to expand from its PayWare solution to compete with Square. Also, the rise of NFC-enabled devices -- featuring access to Google's Wallet payment system or competitors like Verizon's Isis -- could have a profound impact on the sector, depending on the rate at which they are adopted.
