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While I am over the moon for Square and the investment from such a giant in the market, it is also one of those things which irks me. As if Google were to inves

While I am over the moon for Square and the investment from such a giant in the market, it is also one of those things which irks me. As if Google were to invest in DuckDuckGo, or something like that. Would this investment (Visa in Square) affect or turn the direction Square is heading? Obviously Visa is a powerful friend to have in your corner, and financially wonderful as it likely further improves Square's rates for processing Visa cards, etc. Maybe I'm being overly sensitive since they are not direct competitors, I think perhaps my concern is that it seems that Square could have been and this investment makes that path a bit more politically difficult.

Dobbs 15y ago
I think this would be much closer to Google investing in Mozilla (pre-chrome). My understanding is that Visa makes most of their money on credit card processing fees. Square is extra infrastructure that strengthens the use of credit cards. Particularly in a market that was mostly untouched before. Low end mobile payments where limited to cash before. With Square visa is part of the game.
jcampbell1 15y ago
Square is generating incremental revenue for Visa. Visa can now earn a 1% fee from my purchases at the local farmer's market. Prior to Square, that simply wasn't possible. Visa wants to endorse the business model, but rather than just saying "we support this", they instead give Square a $1 "strategic investment". That is their endorsement, and they hope it helps Square grow faster. The faster Square grows, the sooner Visa gets it's 1% from transactions that have historically been cash only. I don't really understand how this can be viewed as a mistake by either party. Sure, it pisses off Intuit and other Square competitors, but Visa has a monopoly, and doesn't have to give a shit. Visa's growth opportunity is replacing existing cash transactions, and their risk is financial regulations that cram down interchange fees. The business strategy for Visa should be endorsing Square for growth, and hiring the best lobbyists to keep prices high.

Dobbs 15y ago

I think this would be much closer to Google investing in Mozilla (pre-chrome). My understanding is that Visa makes most of their money on credit card processing fees. Square is extra infrastructure that strengthens the use of credit cards. Particularly in a market that was mostly untouched before. Low end mobile payments where limited to cash before. With Square visa is part of the game.

jcampbell1 15y ago

Square is generating incremental revenue for Visa. Visa can now earn a 1% fee from my purchases at the local farmer's market. Prior to Square, that simply wasn't possible. Visa wants to endorse the business model, but rather than just saying "we support this", they instead give Square a $1 "strategic investment". That is their endorsement, and they hope it helps Square grow faster. The faster Square grows, the sooner Visa gets it's 1% from transactions that have historically been cash only. I don't really understand how this can be viewed as a mistake by either party. Sure, it pisses off Intuit and other Square competitors, but Visa has a monopoly, and doesn't have to give a shit. Visa's growth opportunity is replacing existing cash transactions, and their risk is financial regulations that cram down interchange fees. The business strategy for Visa should be endorsing Square for growth, and hiring the best lobbyists to keep prices high.