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As part of the investment, a Visa executive will become a strategic adviser to Square, and the two companies will team up in areas that may include international expansion, says Keith Rabois, Square's chief operating officer. The amount and other terms of the investment weren't disclosed.
The alliance may help Visa strengthen ties with local merchants that are increasingly turning to simple mobile devices such as those from Square to process payments. Payments made via smartphone credit-card readers may rise to $55 billion by 2015, from $11 billion this year, estimates researcher Aite Group.
Square, a San Francisco startup created in 2009 by Twitter co-founder Jack Dorsey, is adding about 100,000 local merchants a month, Rabois says. In the first three months of this year, the company processed $66 million in payments, and it expects to triple that amount in the current quarter, he says.
The partnership with Visa may help Square gain traction with merchants outside the U.S. "Square has always aspired to be a global product," says Rabois, "and it may be easier for us to accelerate our growth outside the U.S. by working with Visa."