Square, the mobile payments provider best known for the free one-inch credit card "reader" that plugs into a smart phone (iPhones and iPads at first) and lets anyone accept both credit and debit-card payments, has rasied $100 million in financing, with a $1 billion valuation, the Wall Street Journal reports. See
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The valuation will worry some observers, confirming a possible investment bubble in Internet-related start-ups that promises much pain when the bubble finally does burst. But Square's rapidly-growing transaction flow also indicates that mobile payments finally, after many false starts, getting traction.
Square's value proposition also highlights the complexity of roles in the new mobile payments ecosystem. Square sells a service built on a new type of point of sale terminal (the "square" adapter) and so might be said to compete with VeriFone. But Square monetizes the terminals in a different way, essentially making its money on transaction fees, as do credit card and debit card issuers. In that sense it competes with bank card providers.
Square also competes with Intuit, as both Intuit and Square provide special value for small retailers and other non-traditional retailers. And many expect PayPal to make its move into retail commerce, at least in part, with its own point of sale system designed to be used by smart phones or tablet devices.
But Square also has launched "Card Case," an app that would let users pay directly from their smart phones. That makes Square a contestant in the digital wallet space, where Google, among others, plans to focus.