Bulls Run Wild for Mobile Payments
Bank Technology News | May, 2011
The speculative cash spigots are wide open for contactless point of sale technology, with capital flowing to a variety of startups in the past few weeks alone. In the latest announcements, Visa late last week took a stake in Square and PayPal bought Fig Card.
Founded by Twitter co-founder Jack Dorsey, Square sells small card readers that fit into the headphone jacks of Android phones, iPhones and iPads.
It’s already raised more than $27 million in a round of funding led by Sequoia Capital, and claims to be signing up merchants at the rate of 100,000 per month and processing $1 million in payments daily. The merchants are mostly small domestic retailers. Visa did not disclose the size of the new investment, and the card firm and Square did not return requests for comment on the investment by press time.
The investment’s a vote of confidence in the tech and security capabilities of Square, which is battling against Verifone and a number of other mobile payments startups. Its rivalry with Verifone has been particularly nasty, with the two firms recently trading blog barbs over alleged security softness.
Dorsey’s not the only social media entrepreneur who’s betting on a future dominated by mobile payments. Facebook co-founder Eduardo Savarin recently led a $6.5 million round of financing for Jumio, an online and mobile payment startup.
Visa, which has also participated in NFC pilots, also has company among card firms opening their wallets for mobile. American Express just entered into a partnership with mobile payments startup Payfone—which itself recently received $19 million in a new round of funding. And MasterCard invests in its own research lab, and has participated in NFC trails.
Based on PayPal’s blog, its acquisition of Fig Card is a potential Square-killing play. Fig provides a USB device that plugs into a cash register or POS terminal and communicates with smart phone apps. "We loved their approach to the point of sale, particularly because it was driven by the same vision that we have at PayPal – in the future, transactions can be as smart as a computer and not as dumb as paper," wrote Peter Chu, senior director of PayPal mobile, in the blog.
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