According to the New York Times, Square has just closed a round of venture funding of $150 million. As a result of this influx of money, the company is now valued at $6 billion. It comes after Square was rumored to be in buyout talks with Apple (News - Alert), but now competes with that company and several others in the contested payment processing industry.
San Francisco-based Square, Inc. was founded in 2009 by Jack Dorsey and Jim McKelvey. The company is well-known for its small plastic card reader that plugs into the audio jack of a smartphone or mobile device. It also offers the Stand, which connects to an iPad and makes the combination of the two along with an app, function like a POS station.
A TechCrunch article claims that Apple recently talked to Square about a possible buyout, but the deal fell through because Apple’s $3 billion offer was $2 billion less than what Square thought it was worth. Square denied any rumors of a buyout or IPO in an August blog post. Since then, Apple has pushed its Apple Pay system and has received strong support, especially from major banks.
Square finds itself in a pretty competitive market with other vendors as well as with Apple Pay. Amazon is offering the Amazon Local Register, a device similar to Square’s that also plugs into the audio jack of a mobile device. PayPal (News - Alert) is always going to be a major competitor in this market. Google has developed wallet and Facebook is expected to add payments support to its Messenger app.
Square is currently working on an EMV reader and is taking requests from interested parties to be notified when preordering for the upgraded reader begins. It has also developed solutions that are industry specific and is involved in Caviar, a third-party food delivery service for restaurants that do not offer delivery.
In 2013, Square lost $100 million. Although it continues to attract investors and has customers like Starbucks who have bought into its offerings, the company will soon have to demonstrate its viability. The market is competitive and after EMV becomes the standard in 2015, it will be clearer where the industry stands. Square will have to show at that point that it can be self-sustaining in order to survive.
Edited by Maurice Nagle
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