Feeds

Square gets $1bn valuation with $100m investment

So hip it has trouble seeing over its pelvis

Designing a Defense for Mobile Applications

Square has raised another $100m, giving the payment processor a valuation of $1bn and a new board member in the shape of Mary Meeker, a partner at investor KPCB.

The $100m investment follows $27.5m that was dropped into the business in January, and the original $10m raised on the back of Twitter-founder Jack Dorsey's idea. Based on the investment CNET pegs the value of Square at $1bn, despite the fact that the company has nothing to offer besides ill-fitting and insecure plastic boxes that can be balanced on top of an iPhone to read magnetic stripes on credit cards.

Square did create something of a perfect storm of buzz words when it was launched – iPhone/mCommerce/Twitter – and despite significant embedded competition, Square has managed to convince many people that it invented the idea of using a phone to take credit card numbers, while selling them boxes they can get free from the company's website!

And let's be clear: reading credit card numbers is all that the Square reader does, despite CNET's assertion that it "is being positioned as an alternative to the much-touted but still emerging near-field communication". Square works great in the USA, where magnetic stripes are still the cutting edge of credit card technology, but is next to useless anywhere else.

But America is where the capital is, so that's what matters, and Jack Dorsey's name is a lot more important than having a sensible business model. We know that when Square had 300,000 merchants it was processing about $1m a week in payments, so around $3.30 per merchant. That means each merchant is paying Square about 8 cents a week.

Square now claims to have 500,000 merchants signed up, so at current rates it could realise its valuation in a mere 480 years – though it will have to spend the first six months paying off the cost of the boxes (at $2 a box – our guess).

At a glance, Square would seem to have a business plan that extends hundreds of years into the future, or requires international expansion of a product that has no value outside the USA, not to mention an embedded competition that's price competitive and offers greater security: it's a good thing we're not in a tech bubble or $1bn might seem a trifle optimistic. ®

The smart choice: opportunity from uncertainty

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Airbus promises Wi-Fi – yay – and 3D movies (meh) in new A330
If the person in front reclines their seat, this could get interesting
UK Parliament rubber-stamps EMERGENCY data grab 'n' keep bill
Just 49 MPs oppose Drip's rushed timetable
Samsung threatens to cut ties with supplier over child labour allegations
Vows to uphold 'zero tolerance' policy on underage workers
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
prev story

Whitepapers

Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.