Square raises $27.5m

Twitter founder Jack Dorsey has confirmed that his new mobile payments venture Square has raised $27.5 million in a funding round led by Sequoia Capital.

Previous investor Khosla Ventures also participated in the round which sees the start-up valued at around $240 million. Sequoia's Roelof Botha, a former PayPal CFO, joins Square's board.

Square provides merchants with a piece of plastic that fits in to the headphone jack of Android-based handsets, iPhones and iPads, and acts as a card swipe for processing payments. The reader is shipped for free with Square charging 2.75% plus 15 cents for each transaction.

The company finally began a mass roll out of the technology in November after hardware shortages and underwriting issues led to delays. Between 30,000 and 50,000 businesses have signed up to the system a month for the last three months.

Dorsey told the Wall Street Journal that the money would be used to hire staff, taking employee numbers from 64 (including contractors) to around 150 by the end of the year.

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Comments: (1)

A Finextra member 11 January, 2011, 21:57

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Memories of the ecommerce bubble bursting again? Putting more money into a business that is based on a gimmicky bit of plastic, that does not read chip cards and cannot accept cards from outside of the US at a time when the "Durbin Amendment" looks set to reduce debit card interchange in the US by over 70% looks pretty dumb to me. The basic pricing is also very expensive - and extra 1% is charged if the card number is keyed rather than swiped. Oh yes and as with PayPal, Square hold on to merchant funds for days and days. Only in America!