Kleiner Perkins Investment Pegs Square at $1 Billion

Kleiner Perkins Caufield & Byers (KPCB) is a major Sand Hill Road venture capital firm, one of the most widely known in Silicon Valley.

BY MONICA LANGLEY

A venture-capital giant is leading a group of investors buying a stake in Square Inc. that pegs the start-up's value at more than $1 billion, even as it scrambles to fend off larger rivals in the fledgling marketplace for mobile-device payments.

The $100 million investment in Square by a group led by Kleiner Perkins Caufield & Byers, to be announced as early as Wednesday, quadruples the value of an eight-month-old company facing competitive pressure from Google Inc., Intuit Inc. and eBay Inc.'s PayPal.

At stake are billions of dollars in the rapidly evolving payments industry, as well as the credibility

Read more: http://online.wsj.com/article/SB10001424052702304665904576383813592144744.html#ixzz1Qfh9L3Zj

From Venture Beat: It’s official. Jack Dorsey’s Square has joined the billion dollar valuation club. The mobile payments startup closed a $100 million series C led by Kleiner Perkins, a story we broke a few weeks ago. The new round values Square above $1 billion.

 Square

Website:	squareup.com
Location:	San Francisco , California, United States
Founded:	February, 2009
Funding:	$165M

Square is a revolutionary service that enables anyone to accept credit cards anywhere. Square offers an easy to use, free credit card reader that plugs into a phone or iPad. It’s simple to sign up. There is no extra equipment, complicated contracts,… Learn More

Big Announcement Coming from Square?

What’s the announcement? I don’t know, but according to Michael Arrington at TechCrunch, founder Jack Dorsey says it’s a big one. Does it relate to the Visa investment in Twitter, I mean Square?  Are they going to announce that they will actually "encrypt" the card holder data?  Oh it says "exciting news"...stay tuned...

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Analysis on why Visa Made an Investment in Square

Visa (Goliath) Not Investing in David (Square) but Goliath (Twitter)

Yesterday's announcement that Visa made a strategic investment in Square took many in the payment industry by surprise...especially Verifone,  as this news squarely provides Verifone with a Black Eye and not the Pea kind.  

In prepared statements, Square’s Jack Dorsey, said: “We’re thrilled to partner with Visa. This relationship will accelerate our vision of empowering businesses and aspiring entrepreneurs to succeed. The best way to grow your business is to accept credit cards. Together, we can ensure that all businesses of any size can pursue the American Dream.”

Verifone's Insecurity "Around" Square
Gained Momentum with Visa announcement

So Why would Goliath invest in David asks Forbes? Good question.

Here's my opinion:

Square has been targeted by Verifone as "less than secure."  (see Verifone Ad on right) Therefore, by getting the backing of Visa, Square not only provides Square with "instant credibility" but, at the same time, strikes back at Verifone.  Let's say that Verifone's Insecurity "AROUND SQUARE" just gained momentum...albeit in reverse.

Shout out to Verifone:  If it makes you feel any better, I've got a feeling, that Visa isn't as interested in Square as they are in Twitter's 200 million base. Here's why:

After spending a couple hours last night wondering why on earth Visa would invest in Square…(If Goliath was going to invest in David why not a David with a PCI Certified personal POS)...I think I got it figured out.  

It’s because David isn’t really David afterall, David is Goliath. (Square is Jack Dorsey and Jack Dorsey is (again) Twitter)  

It’s all about P2P (person to person money movement) and this is Visa making a brilliant P2P investment/move.  Let's look at some recent developments:

1.  Jack Dorsey recently rejoined Twitter and therefore, Dorsey is playing a dual role at Square (CEO) and Twitter, where he has returned to lead product development.  Let's just say that paving the road for a real time T2T (twitter to twitter) payment platform is a helluva good start.  Think of it.  Need to pay the babysitter?  Twitt-her.   Owe someone $15 bucks for a burger and a beer?  Twitt-him.   Want to donate $10 to Tokyo, Haiti, Tuscaloosa, etc.?  Twitt-it.

2.  Visa recently announced it was partnering with Fiserv (Zashpay) and CashEdge to enable people to send money from any Visa card or a bank account to another person's credit or debit card  (Visa cards only, naturally). In the case of owing your buddy $15 for a burger and a beer, send $15 from your debit card to his debit card.  (Visa cards only)

 3. Twitter has a 200 million (and growing) base which paves the way for Visa to provide a key competitive advantage over MasterCard in the much ballyhooed P2P market.  Believe me, MasterCard recognizes the potential value of P2P. as this press release from MasterCard on 4/27 demonstrates.  MasterCard Names Marcie Verdin Group Head, Global Person-to-Person Payments  

So, my simple analysis is that Visa is investing in Square in order to introduce P2P payments and “Skim” from Twitter’s 200 million base.  At the same time, they shut out MasterCard. (Visa cards only) It's a brilliant move by all parties...Visa, Square AND Twitter.  Especially in light of the fact that former Google CEO, Eric Schmidt recently invested in a small company called Twitpay which is trying to carve a niche in the charitable donations/payments arena.

At the end of the day, Jack Dorsey's strategic partnership with Visa was indeed a brilliant move, but without Twitter, it's a move that never would have happened in a billion years. (Then again, a billion years passed before someone came up with Twitter and Jack Dorsey not only did, but will probably earn at least a dollar or $5 for every one of those passing years.)  

Prediction:  Visa and Twitter will make a killing off the P2P/T2T business. I don't know what they'd call it. (I kinda like Twit$) and when Twitter and Visa introduce "Twit$" Powered by Visa,  Square AND Twitter will make a piece of every transaction.  And it won't stop there.  The possibilities are endless.   In closing, I'd like to point out that if this wasn't the idea behind the Visa/Square strategic relationship, then I'm wrong.  :)  

If you have any comments or thoughts on this analysis, please feel free to email them to: SquareRoundup@ePINDebit.com

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Jack Dorsey's Square Roll Out Delayed over "Security Concerns"

Image via Wikipedia

Finextra Reports that Jack Dorsey's Square is back to...Square One?



Square roll-out delayed over security concerns

Much-hyped payments start-up Square has been forced to delay shipping its product that turns mobile phones into payment card readers because of emerging fraud concerns, with founder Jack Dorsey admitting parts were released "before they were fully baked".



Unveiling his new firm to much fanfare in December, Twitter founder Dorsey predicted Square would be available for customers in the US early this year.



Now, in a letter to customers (see below), he admits "we've let our excitement get the best of us" and says "we realize the amount of time we've taken to ship our Square readers has been frustrating, sometimes confusing, and has generated a number of questions".  The start-up initially suffered from hardware shortages but says this has been resolved with manufacturers in China.



However, a new problem has emerged. According to a letter to users from the Square support team: "We need to strengthen our underwriting infrastructure so that we can handle the huge demand for readers and still manage the risk of chargebacks and fraud."



Dorsey says Square initially moved to negate the risks by setting transaction limits but these have been set too low according to customers, prompting "rethinking and expanding" of the underwriting infrastructure.



The letter provides no details on when the product may be ready to ship, with Dorsey signing off: "We thank you for your continued patience as we work to deliver a utility you can use every day and for allowing us the time to get it right."



Finextra verdict: Reality bites for Square. Overly-hyped by the starry-eyed Silicon Valley tech press, Jack Dorsey and Co are discovering the hard way that payments processing is not as easy or as simple as it might first appear. Innovation has its place, but in the money-changing business it has to be backed up by a resilient infrastructure and water-tight contracts. There's no place for a fail-whale in the payments sphere.



Editor's Note:  Want PIN Transaction Capability?  Take a look at our SLIM POS with a built-in PCI Certified PIN Entry Device. (below)  

Conduct Secure End-to-End-Encrypted PIN Debit Transactions with our SLIM PCI Certified PIN Entry Device

Here's a copy of the letter sent by Jack Dorsey:

"Dear Square user,



We announced Square with the phrase: "0 to $60 in under 10 seconds."



Square's goal is to enable people to accept payments immediately, everywhere. We realize the amount of time we've taken to ship our Square readers has been frustrating, sometimes confusing, and has generated a number of questions. When we announced the company last December, we estimated Square would be ready in the U.S. sometime in early 2010. Since then, we've let our excitement get the best of us and have released parts of Square before they were fully baked.



A recent email from our support team to a Square user sums up where we are:



Until recently, we were facing a big hardware shortage, but that is now resolved (we sent our co-founder Jim to China for a couple weeks to arrange better manufacturing, and that did the trick). The problem has transitioned to something we've been working on simultaneously, a credit processing and risk issue. We need to strengthen our underwriting infrastructure so that we can handle the huge demand for readers and still manage the risk of chargebacks and fraud. This is the last thing preventing us from shipping readers as fast as we'd like, and we have pretty much the entire team working on it.



The way we are handling the risk of chargebacks and fraud is through transaction limits, but we have received feedback that those limits are too low. We are rethinking and expanding our underwriting infrastructure to address this issue. As soon as we finish, we will send you an email to confirm that you would like us to run a credit check (or you can cancel your request to process cards with Square which will securely remove your personal information). We will then ship your free card reader and activate your account to accept card payments.



We thank you for your continued patience as we work to deliver a utility you can use every day and for allowing us the time to get it right.



Jack Dorsey

Square CEO"

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Back to Square One? Jack Dorsey's Square Rollout Delayed over Fraud/Security Concerns

Featured Post: Jack Dorsey's Square Roll Out Delayed over "Security Concerns"

Finextra Reports that Jack Dorsey's Square is back to...Square One?

Square roll-out delayed over security concerns

Much-hyped payments start-up Square has been forced to delay shipping its product that turns mobile phones into payment card readers because of emerging fraud concerns, with founder Jack Dorsey admitting parts were released "before they were fully baked".

Unveiling his new firm to much fanfare in December, Twitter founder Dorsey predicted Square would be available for customers in the US early this year.

Now, in a letter to customers (see below), he admits "we've let our excitement get the best of us" and says "we realize the amount of time we've taken to ship our Square readers has been frustrating, sometimes confusing, and has generated a number of questions".  The start-up initially suffered from hardware shortages but says this has been resolved with manufacturers in China.

However, a new problem has emerged. According to a letter to users from the Square support team: "We need to strengthen our underwriting infrastructure so that we can handle the huge demand for readers and still manage the risk of chargebacks and fraud."

Dorsey says Square initially moved to negate the risks by setting transaction limits but these have been set too low according to customers, prompting "rethinking and expanding" of the underwriting infrastructure.

The letter provides no details on when the product may be ready to ship, with Dorsey signing off: "We thank you for your continued patience as we work to deliver a utility you can use every day and for allowing us the time to get it right."

Finextra verdict: Reality bites for Square. Overly-hyped by the starry-eyed Silicon Valley tech press, Jack Dorsey and Co are discovering the hard way that payments processing is not as easy or as simple as it might first appear. Innovation has its place, but in the money-changing business it has to be backed up by a resilient infrastructure and water-tight contracts. There's no place for a fail-whale in the payments sphere.

PINDebit Blog Verdict:  In addition to providing secure "card present" magstripe transactions our SLIM POS has a built-in PCI 2.1 Certified PIN Pad for ultra-secure Genuine DUKPT End-to-End-Encryption, thus PIN Debit rates.

Conduct Secure End-to-End-Encrypted PIN Debit Transactions with our SLIM PCI Certified PIN Entry Device

Here's a copy of the letter sent by Jack Dorsey:

"Dear Square user,

We announced Square with the phrase: "0 to $60 in under 10 seconds."

Square's goal is to enable people to accept payments immediately, everywhere. We realize the amount of time we've taken to ship our Square readers has been frustrating, sometimes confusing, and has generated a number of questions. When we announced the company last December, we estimated Square would be ready in the U.S. sometime in early 2010. Since then, we've let our excitement get the best of us and have released parts of Square before they were fully baked.

A recent email from our support team to a Square user sums up where we are:

Until recently, we were facing a big hardware shortage, but that is now resolved (we sent our co-founder Jim to China for a couple weeks to arrange better manufacturing, and that did the trick). The problem has transitioned to something we've been working on simultaneously, a credit processing and risk issue. We need to strengthen our underwriting infrastructure so that we can handle the huge demand for readers and still manage the risk of chargebacks and fraud. This is the last thing preventing us from shipping readers as fast as we'd like, and we have pretty much the entire team working on it.

The way we are handling the risk of chargebacks and fraud is through transaction limits, but we have received feedback that those limits are too low. We are rethinking and expanding our underwriting infrastructure to address this issue. As soon as we finish, we will send you an email to confirm that you would like us to run a credit check (or you can cancel your request to process cards with Square which will securely remove your personal information). We will then ship your free card reader and activate your account to accept card payments.

We thank you for your continued patience as we work to deliver a utility you can use every day and for allowing us the time to get it right.

Jack Dorsey
Square CEO"

Read more: http://pindebit.blogspot.com/2010/06/jack-dorseys-square-roll-out-delayed.html#ixzz0rV8aAhKb

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Square Executives Dorsey, McKelvey to Keynote PAYMENTS 2010

Herndon, Va., Feb. 4, 2010 -- Twitter co-founder and Square CEO Jack Dorsey and Square chairman Jim McKelvey will be the keynote speakers at the opening general session of PAYMENTS, the annual conference of NACHA—The Electronic Payments Association. This session will take place at 9:15 a.m. Pacific on Monday, April 26, 2010, at the Washington State Trade and Convention Center in Seattle.



As the financial services industry starts investing again in innovation, the PAYMENTS conference provides unmatched access to and analysis of the newest developments in emerging technologies. Illustrating this point, the opening general session will offer an in-depth review of Square, the smart phone card terminal that allows individuals to accept credit card payments.



Dorsey and McKelvey will take questions from a panel of payments industry experts and respond to real-time tweets (Follow PAYMENTS at http://www.twitter.com/NACHA_PAYMENTS ). The speakers will share their insights on the Twitter phenomenon, Square, mobile payments, and what it will take to electronify the last mile.



The no-holds-barred approach to the session with expert panel interviews and audience-member tweets will ensure that the industry’s most pressing questions are answered.



“PAYMENTS educational sessions are designed to be on the cutting-edge of innovation, and it’s our goal for sessions to reflect the latest, most-discussed breakthroughs in the industry,” said conference chair Laura J. Listwan, AAP, CCM, senior vice president, U.S. Bank.



“Square certainly has generated a wave of supporters, skeptics, and critics alike, and in this keynote discussion, we’re providing an unparalleled opportunity to hear first-hand about the product from its creators and find out what it really means for payments.”

Square was born out of necessity and frustration, according to McKelvey. He could not sell a piece of his handcrafted glass artwork because he was unable to accept the customer’s preferred payment choice, and that lost transaction resulted in Square. The dialogue at the PAYMENTS opening session will provide insights into plans for the future of Square and the role it may play in the payments industry. This session also will be simulcast, allowing industry stakeholders worldwide to participate.



In addition to the opening session, PAYMENTS 2010 offers more than 125 educational sessions and workshops and features speakers from financial institutions, companies, government agencies, consulting and research firms, service providers, and more. Sessions are organized along seven tracks — Automated Clearing House (ACH), risk & compliance, payments biz, corporate payment solutions, check electronification, global focus, and card solutions.



Hot conference topics include ACH/check convergence, IAT and opportunities in international payments, mobile, P2P and B2B innovations, healthcare payments, social media and payments, prevailing risk management and security practices, and legal and regulatory developments.



To learn more about PAYMENTS 2010 sessions, workshops, speakers, sponsors, and exhibitors, or to take advantage of early registration discounts, visit http://payments.nacha.org .



Source: Company press release.