Startup Square just secured a major advantage competitive mobile payments space — a strategic investment from Visa, which will put one of its executives on the company's advisory board.
This isn't about the cash — earlier this year Square raised $27.7 million in financing, led by Sequoia capital — this is about validation from Visa, a leader in credit card payments.
Considering that all of Square's rivals, including Quicken and PayPal, have been looking to partner with a giant like Visa, this gives Square a huge advantage in getting merchants to adopt its service.
Square is a little device that plugs into iPhones, iPads, and Android phones, to allow anyone to swipe a credit card and accept payments. There's no contract — just a 2.75 percent fee for each transaction. The company's run by Jack Dorsey, one of Twitter's co-founders, who's now back at the company as chairman.
Visa's support could be just what Square needs to cross to the mainstream.
The company signs up about 100,000 new merchants per month and processed $66 million in transactions in the first quarter and expects to do three times that in the second quarter. Now, with Visa on board, it's focusing on increasing awareness of Square, especially to the 27 million US small businesses that don't currently accept credit cards.
Why is Visa partnering with Square? It wants to stake a claim in the new, innovative ways, people are making payments. In February Visa bought 'PlaySpan' a platform for buying and selling virtual goods for $190 million in cash. In March Visa announced it will allow U.S. consumers to send and receive funds — just like PayPal — to Visa credit debit or pre-paid accounts.
Square has been lining up some impressive partners — just last week Apple stores started carrying the devices.
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