In 2009, entrepreneurs Jack Dorsey and Jim McKelvey created Square, Inc. (SQ), fulfilling their dream of creating technology capable of aggregating merchant services and mobile payments into a single, easy-to-use service. Less than a decade later, Square was downloaded over 33.5 million times by small businesses that use it to accept credit card payments, track sales and inventory, and obtain financing.

Key Takeaways

  • Jim McKelvey and Jack Dorsey launched Square, Inc., a merchant services and mobile payment platform, in 2009.
  • More than 30 million businesses use this technology to facilitate credit card payments and track sales.
  • Starting in 2017, the company's Square Cash App began allowing merchants to use bitcoin in the technology.

Square's product line includes Square Cash, which allows users to send and receive money for free through a mobile application, and Square Point-of-Sale, a free application that lets merchants process payments via smartphone. In its Q3 2018 earnings statement, the peer-to-peer payment processor reported $431 million in revenues, representing a 68% increase from that same period, one year prior.

How Square Grew Its Financials

Square received seven rounds of private funding before going public in November 2015. Major investors included Acequia Capital, Sequoia Capital, and Khosla Partners. On November 19, 2015, Square's shares began trading on the New York Stock Exchange for $9 per share, with a company valuation of $2.9 billion. By November 8, 2018, Square's market capitalization grew to $31.2 billion, representing a whopping 974.1% price increase since the IPO.

In November 2017, the Square Cash App announced a trial program that availed bitcoin trading to certain users, which spiked the company's stock price to a record high of $48.86 per share. On March 12, 2018, the stock reached another record high of $54.89 per share, following news that the company was extending its bitcoin trading services to Wyoming.

On April 27, 2018, Square announced its acquisition of San Francisco-based Weebly, a website construction service and web hosting service company. Square acquired food delivery service Caviar in August 2014. It then became the first company to own both a food delivery company and a point-of-sale service, after launching Square for Restaurants in May 2018.

What Products and Services Does Square Offer?

Square charges merchants 2.75% of the sales price of any transaction they process via swipe, insert, or tap, and it charges 3.5% plus 15 cents for every manually keyed-in transaction. Square POS lets customers pay, tip, and sign on a merchant's mobile phone or tablet, and lets merchants process payments made with credit cards, gift cards, and cash. Business owners can also use the app to send and track invoices, customize products, email receipts, apply discounts, administer refunds, access real-time sales data, and track inventory in real-time.

Square POS is typically used in conjunction with Square Reader, a small device that can be installed on a smartphone or tablet, that reads credit and debit cards. Users can access this information and engage in these activities by logging onto the app's dashboard. The money from merchants' transactions is typically deposited into their bank accounts within two business days. Other Square products include Square Analytics, a free set of tools that can be applied on top of its POS products. The company also offers Square Appointments, an online service that lets users book appointments.

Square Stand, one of the company's few physical products, lets users turn an iPad into a complete point-of-sale tool. The company has also expanded into financing small businesses, with products like Square Capital, which provides cash advances to merchants, without locking them into payback schedules. The firm now provides complete payroll services to businesses in 38 states, with Square Payroll. In 2015, Square released a new version of Square Reader that's compatible with Apple Pay and other digital payment systems.

To prevent fraud and identity theft, Square introduced encryption technology on its devices, which do not store card numbers, security codes, or magnetic stripe data.

Square's Corporate Profile

Square has acquired a multitude of companies, including Storehouse, Fastbite, and Kili. The company's major competitors include Google Wallet (GOOGL), Intuit Inc. (INTU), and PayPal-owned (PYPL) Venmo.

Square now has offices in several countries, including the United States, Canada, and Japan. It boasts more than 2,000 employees and its board of directors includes former U.S. Treasury Secretary and Harvard University President Lawrence Summers, as well as former Goldman Sachs CFO David Viniar.