Where it's based: San Francisco
When it was founded: 2009
Why it's Fierce: Square allows just about anyone to accept credit card payments: The babysitter, the music instructor and the barbershop down the street that's been there since the 1940s. All you need is a smartphone (Android or iOS) and a bank account--Square takes care of the rest, without any monthly fees or contractual commitments.
How, you ask? The company provides for free a tiny, square credit card reader that plugs into a smartphone's headphone jack and can read any credit card. The Square app (also free) transmits the credit card information and allows the purchaser to authorize the transaction with a signature on the phone's touchscreen. Square deals with the rest--a not insignificant task, considering the bulky card reader, $15 to $25 monthly fee, one- or two-year contract and $25 minimum monthly transaction required by most credit card processing companies. Square makes its living via the 2.75 percent fee it levies against each transaction.
Square processed $66 million in transactions during the first quarter, Keith Rabois, Square's chief operating officer, told the Wall Street Journal. Square expects to triple that figure during the current quarter.
But wait, there's more! Square was founded by Jack Dorsey, the creator of Twitter. Interestingly, Dorsey remains Square's CEO but recently started working again for Twitter. But Square, which counts around 100 employees and around $40 million in venture funding, needn't worry: The company last month received an undisclosed "strategic investment" from credit card giant Visa, an action that in one motion legitimizes Square's technology and business model.
What's next: Square declined to discuss its next steps, and remains relatively secretive about its direction. But recent market noise around Near Field Communications and mobile payment technologies will only help raise Square's profile--as giants like Research In Motion (NASDAQ:RIMM) and Google (NASDAQ:GOOG) begin promoting NFC as a way to pay for goods and services with phones, the reverse--accepting payment via the phone--may be more palatable to those on the fence. Further, the popularity of smartphones will help grow Square's customer base. Finally, the appearance of Square's credit card reader in Apple stores won't hurt the company's chances either--the action essentially signals Apple's embrace of Square's concept and Apple's willingness to take on Square inventory.