Square’s co-founder, Jack Dorsey, is also the co-founder of Twitter. (The man clearly knows how to create game-changing companies!) Square has been rumored to be an IPO candidate for months; by the time the shares are listed you should be looking for a good entry point. Electronic payments have become a fast-growing alternative to cash, and Square is right in the vanguard of that revolution.
Square enables transactions just about anywhere and between just about any buyer and seller, from large companies to the smallest “mom n’ pop” stores and even between individuals. A seller just has to swipe a buyer’s card through a Square card reader, and the payment goes through — on virtually any device. There’s even Square Wallet, which lets iPhone users pay without having to take out their phone.
There’s no doubt that the cash-less society is evolving. Square gets revenues from taking about a 2.75% slice of the payments its devices process — and management recently said it is processing at least $15 billion in transactions annually. That doesn’t even include a deal with Starbucks where Square Wallet lets you use the app to pay in the store with a simple tap on your mobile device screen.
Square competes in a crowded space, as many companies want to own a piece of electronic payments. Even credit card companies are offering their own card readers, with lower fees. While a “price war” may eventually overtake technology and impact Square’s sales growth, that impact is a long way away. For now, Square has a real lock on payment via mobile technology.
Make sure to check back next week for the next two companies on my IPO list!