Mobile payments service Square has raised $150 million in its Series E funding round, and is now valued at $6 billion during a tumultuous time for the payments industry.
The latest valuation, put forward by an anonymous New York Times source, places Square in the realms Internet start-ups like Pinterest and Spotify, which also have valuations around $5 billion to $6 billion.
The latest round was led by the Government of Singapore Investment Corporation, a new investor, and some previous investors, including Goldman Sachs and Rizvi Traverse Management, also took part.
Square was already facing challenges in attempts to encourage the adoption of its payments service, and spent much of its early years giving away free credit card readers to small and medium-sized businesses, asking for 2.75 per cent of each transaction using the reader. The small dongle as been popular with merchants who had conducted mostly all-cash operations, but faced serious competition from alternatives such as PayPal and other payments-orientated startups, and now faces new offerings from Amazon and Apple Pay.
Square has recently attempted to diversify its business model, launching an odd range of alternative services. In May, the company introduced Square Capital, a cash advance programme for small businesses. Square acquired and continues to run Caviar, a start-up that provides food delivery for restaurants that do not otherwise offer it. Square also offers an appointment booking service to small businesses for a monthly fee.
But when it comes to payments, despite the positive valuation, Square still faces tough competition. In response, Square will introduce a new card reader that is compatible with chip and pin transactions, as the cards start to rollout in the US. It also plans to accept Apple Pay payments, which could increase transaction volume if the new form of payment takes off.
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