Square now processing USD5 billion yearly as competition grows

25% growth in the volume of transactions since March

Square is now processing USD5 billion worth of payments annually, indicating a 25% growth in the volume of transactions since March, when the firm revealed a USD4 billion figure. The mobile payments firm is also upping the pressure on its competitors, announcing that it will now ensure funds reach merchants’ bank accounts by the next working morning, where rival firms take several days. Square’s updated figures come as it sees eBay-owned PayPal beginning to encroach on its space, with both firms now offering merchants the ability to process card payments via their mobile devices using a small add-on reader.

Square’s update on getting funds to merchants is an important one as it attempts to keep ahead of the competition in a growing market.  “Sole proprietors and small businesses live and die by their cash flow,” says COO Keith Rabois in an interview with Bloomberg. “They don’t have access to capital; banks don’t give them loans. They need to take the money they make today and use it to pay bills, buy things and pay employees the next day, so having access to funds is super-crucial for them.

However, Square continues to face a serious challenge from newly-launched PayPal Here, which mimics its service closely. Although merchants must be signed up to a PayPal business account, PayPal claims to transfer funds immediately, and it also takes a smaller transaction fee than Square. For now, Square has some key advantages; the celebrity status of its founder, Jack Dorsey, its popularity among its customers, and its position as a first mover. The firm claims 1 million US merchants are using Square, keeping it ahead of PayPal Here, which boasts 200,000. But Square’s service has been operating since early 2010, while PayPal Here launched in March and can tap into PayPal’s existing base of 9 million merchants.

Square is reportedly looking to raise some USD250 million, at a valuation of USD4 billion, with Dorsey and Rabois recently wrapping up investor meetings, according to TechCrunch.

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