Mobile payment company Square just announced their partnership with Visa (V), and the credit card giant will invest an amount in the “single-digit millions.”
A little background: Square, launched in 2010 by Jim McKelvey and Twitter co-founder Jack Dorsey, allows business to accept credit card payments through a small device which plugs in to the headset jack of a mobile device. Square is a free app compatible with the iPhone, iPad and Android phones, and it also works with MasterCard (MA), Discover (DFS) and American Express (AXP), and charges merchants a standard 2.75 percent per swipe.
With the partnership, a Visa executive will become an advisor to Square. The company is also adding a bank exec from J.P. Morgan Chase (JPM). Visa is essentially giving the company a big seal of approval, and could perhaps bring some hesitant businesses on board. Currently, about 90 percent of Americans carry credit cards, yet there are still 27 million small businesses that don’t accept that form of payment.
The deal with Visa is just another step up the Square ladder as it becomes more widespread. Just last week, Square announced a deal to sell the credit card reader on the Apple (AAPL) website and in their 285 U.S. Apple Stores. The device sells for $9.95, but comes with a $10 Square credit (the reader is free when you sign-up online). It can’t be long before this becomes the method of payment inside the Apple store, as well.
Even without the new deals, Square is becoming quite the success story. In the first quarter of 2011, the company processed $66 million in transactions, while they estimated they would do about $40 million. They expect that number to triple in the second quarter. In the fall of 2010, the company signed-up about 30,000 merchants a month. Now? It’s 100,000 signing-up every month. In January, Square was valued at $240 million, and that number will continue to rise significantly.
The company could be on the verge of a massive development which changes the way people pay for goods. Square is the perfect example of just how widespread the app business is growing, whether it’s killing time on your phone playing Angry Birds, or something as useful as everyday credit card payments. If Square continues at this rate, it has the potential to be the next great revolution of the smartphone era.
