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From: Glenn Petersen4/25/2012 3:45:15 PM
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EBAY should try to acquire this company:

Square Payment Pace Rises 25% in Niche Coveted by EBay

By Danielle Kucera
Apr 25, 2012 11:00 AM CT

Square Inc., maker of credit-card readers for smartphones and tablets, has increased its payment volume 25 percent since March, when EBay Inc. (EBAY)’s PayPal showed off a new mobile scanner and underscored growth in the field.

Square, founded in 2009, is processing transactions at an annualized rate of $5 billion, up from $4 billion a month ago, as more consumers embrace mobile payments, Chief Operating Officer Keith Rabois said in an interview. The San Franciscocompany is making cash from sales before 5 p.m. on any day available in merchants’ accounts on the next business day, compared with as many as five days out for other processors.

The market may top $170 billion in transactions by 2015, up from about $60 billion last year, according to Juniper Research Ltd. Square’s rivals include Intuit Inc. and Paypal, which has said its mobile-payment volume will jump 75 percent this year to $7 billion. To lure merchants, Square is speeding access to funds.

“Sole proprietors and small businesses live and die by their cash flow,” Rabois said in an interview. “They don’t have access to capital; banks don’t give them loans. They need to take the money they make today and use it to pay bills, buy things and pay employees the next day, so having access to funds is super-crucial for them.”

Square, which is closely held, was created by Jack Dorsey, the co-founder of Twitter Inc. Investors in Square include Sequoia Capital and Khosla Ventures.

Waiting for Money

Before the appearance of services such as Square, merchants grew accustomed to waiting for credit-card payments to translate into cash. Normally, a payment is evaluated for risk exposure, transferred to the merchant’s bank and sent through a national network, or automated clearinghouse, before it brings cash to a seller’s account. That can take two to five days.

Square declines to say how it reduces the process to a single day, citing competitive reasons. The company doesn’t release its financial results, and won’t say whether it is profitable.

Square’s technology enables U.S. businesses to handle payments through Apple Inc.’s iPhone or iPad, or through devices running on Google Inc.’s Android software. The card reader plugs into the headphone jack of the mobile device. The reader, introduced in 2010, is available at Wal-Mart Stores Inc. (WMT), Target Corp. (TGT) and Apple outlets.

Payments processors are pushing deeper into the mobile-payment market with smartphone readers that allow merchants to accept payments in any location. Last month, PayPal announced PayPal Here, a device that competes with Square’s card reader. It charges merchants 2.7 percent on transactions, less than Square’s 2.75 percent.

Adding Staff

Both PayPal and Square accept cards from MasterCard Inc. (MA), Visa Inc. (V), Discover Financial Services (DFS) and American Express Co. (AXP)About 200,000 merchants have signed up for PayPal Here, EBay said earlier this month.

More than 1 million are using Square to accept credit cards, according to the company.

Square, is aiming to double its staff to 500 by the end of the year. The company hired Ricardo Reyes as vice president of communications and brand marketing earlier this month. Reyes previously ran communications at Tesla Motors Inc. and Google’s (GOOG)YouTube.

To contact the reporter on this story: Danielle Kucera in San Francisco at

To contact the editor responsible for this story: Tom Giles at
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