Paying with Square. Image: Square
Since the days of the first shekels, people have made money off moving money. In a show of confidence that this trend will continue, investors are pouring another $200 million into Square. The San Francisco startup co-founded by Twitter inventor Jack Dorsey makes money by making it possible for anyone with a smartphone to accept credit cards. This fall, Square will start processing all credit card payments for Starbucks, and its Pay with Square app lets you pay at the checkout counter without having to take anything out of your pocket at all. Every time money moves via its technology, Square takes a cut.
For now, shoppers probably think of Square mostly by way of its card readers plugged into iPads at farmers markets and food-truck gatherings. But you'd have to move a lot of organic kale and kimchi burritos to equal the $8 billion in payments Square said today it processes annually. At Square's standard rate of 2.75 percent per swipe, that's $220 million in revenue.
Still, the company will have to do better than that to justify this latest capital infusion, which comes courtesy of investors that include Citi Ventures, Rizvi Traverse Management and Starbucks. The influx brings Square's total financing to more than $341 million.
In its pursuit of bigger returns, Square's San Francisco office is humming thanks to an ongoing hiring spree that has brought the company to more than 400 employees, up from 150 a year ago. Though Square started in 2009 as a company focused on taking payments, much of its energy now is directed at making payments — an effort that will face its biggest test this fall in the Starbucks rollout. Will customers already perfectly willing and able to part with their money in exchange for towering Frappucinos find that there's something about Square convinces them to change the way they pay?
Dorsey certainly thinks so. At a recent appearance in San Francisco, Dorsey said that he's aiming to make Pay with Square the Amazon 1-Click of offline commerce.
"You don't think about how the money is transferring. You just think about what you want and if you can afford it. And that's really all you have to consider," he said.
If Square can really make paying for your coffee that friction-free, Dorsey believes consumers will make the switch. Then he hopes they'll forget about Square almost entirely. Not noticing the technology you're using to accomplish a specific task is at the core of Dorsey's design philosophy. The products he idolizes are also the most mundane: electrical outlets and traffic lights.
"They become so utilitarian, such great tools, that people don't have to think about them," he said. "They get out of the way completely."
It's a good business philosophy, too, since technology achieves mundanity through ubiquity. You don't notice the electrical outlet is there because they're everywhere. So in a sense, investors have placed a $200 million bet that Dorsey can make Square boring. They win when paying with Square becomes just paying.
Marcus Wohlsen 18 Sep, 2012
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Source: http://feeds.wired.com/~r/wired/index/~3/5wZ7qgoHWGo/
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