Visa Backs Twitter Inventors Mobile Payments Bid
SAN FRANCISCO – Visa said yesterday it has invested in Square, a mobile payments start-up founded by the Twitter co-founder Jack Dorsey that turns phones and iPads into credit card readers.
Under terms of the investment, a Visa executive will join Square’s advisory board.
Square is a tiny magnetic card-reader that plugs into a device, such as an iPhone or Google Android phone, to transmit payments through the Visa network.
Officials at Square and Visa said Square could convert the 27 million businesses that don’t accept credit cards into Visa customers. Square is trying to become more mainstream through a new partnership with Apple to sell Square devices in its stores.
Square’s customers are individuals and small businesses that previously accepted only cash, such as housekeepers, farmers and artists. Users get a free reader through Square’s website or from the Apple Store to plug into an iPad, iPhone or Android phone. They then can accept credit card payments for a 2.75% fee, avoiding the contracts and fee schedules of payment processors.
One of Square’s biggest hurdles was convincing merchants, shoppers and credit card companies that it could prevent fraud. Visa’s vote of confidence is a sign that it has successfully done that, the company declared. Square says it has security features that typical credit card processors don’t, because it can show the photo and location of the shopper and send receipts via e-mail.