Square

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Square
Square, Inc. logo.jpg
Founded 2009
Headquarters San Francisco, CA
Key People Jack Dorsey, Founder and CEO
Employees 1000-5000
Products Square payment system
Twitter @square
LinkedIn Profile
Facebook Page
Website Squareup
Blog Town Square

Square is a company that created a digital payment processing system with the same name. Square was founded by Jack Dorsey, co-founder and CEO of the social media platform Twitter, along with Jim McKelvey, in 2009.[1][2]

Square's POS (point of sale) payment system works through a peripheral credit card reader, which is wirelessly connected to a plastic dongle that can be plugged into a tablet or smartphone. The dongle receives information about the credit transaction and feeds it into the device, processing the transaction through Square's app, which automatically deducts a share of the transaction (2.75 percent for streamlined, "swiped" transactions, 3.5 percent plus $0.15 for manually keyed-in transactions). The Square app also allows users to create custom interfaces for their businesses' dashboards, as well as create loyalty programs for their businesses.[3][4]

Square is primarily used by small to medium-sized businesses. In addition to credit payments, Square also supports payments made through Apple Pay.[5]

Square hired former Google director Steve Lee as the first member of its cryptocurrency development team in June 2019.[6]

In August 2021, Square reached a deal to acquire Afterpay, an Australian “buy now, pay later” provider, in a $29bn all-stock transaction that would be the largest takeover in Australian history. Square offered Afterpay shareholders 0.375 shares of Square stock for every share they own. Once the acquisition is completed, Afterpay shareholders will own about 18.5 per cent of Square, the companies said.[7]

Cryptocurrency[edit]

Co-founder Jack Dorsey has long held an interest in cryptocurrency, particularly bitcoin. He has said he hopes bitcoin will become the Internet's native currency at some point and has expressed interest in integrating the ability to process payments using bitcoin into Square.[8]

In August of 2018, the U.S. Patent & Trademark Office approved Square's patent for a payment system allowing merchants to process payments using bitcoin and other cryptocurrencies, including Ether.[9][10]

In February 2019, Square reported to the SEC that it had sold approximately $165 million in bitcoin for which it had received more than $166 million from customers in 2018, leaving a net profit of $1.69 million for bitcoin sales that year.[11]

During the first quarter of 2020 the Cash App sold $306 million worth of bitcoin, generating $7 million in gross profit, a margin of about 2.3 percent. The company's profits from bitcoin sales for all of 2019 totaled just $8 million.[12][13]

In its Q2 2020 earnings report published in August, Square announced it had experienced a huge jump in bitcoin transactions, recording $875 million in bitcoin sales with a gross profit of $17 million from the transactions.[14][15] This is a margin of slightly less than two percent.

In October 2020, Square announced it had purchased 4,709 bitcoins, worth roughly $50 million at the time, representing one percent of the firm's total assets at the end of the second quarter of 2020.[16][17] In a document released at the time it announced the purchase, Square affirmed its support for bitcoin, saying, "We view bitcoin as an instrument of global economic empowerment." Hinting at both the then currently raging novel coronavirus pandemic as well as social unrest in the U.S. and the quickly approaching U.S. presidential election, the company also noted that it seemed to be the "right time" for such an investment.[18] In February 2021, Square announced that it had bought another 3,318 bitcoin (BTC), or $170 million worth.[19] Around that time, Square also reported that its Cash App sold $1.76 billion worth of bitcoin to its customers in the last quarter of 2020. It also sold a total of $4.57 billion over the course of 2020, generating about $97 million in gross profits from bitcoin alone, $41 million of which came from Q4 of 2020.[20]

Square Crypto[edit]

In March 2019, Dorsey announced that Square was in the process of hiring up to five developers for a group to develop "open source contributions to bitcoin and [the] crypto ecosystem." The project would be based in Square's San Francisco offices and the team would reportedly have the option to be paid in bitcoin.[21]

On January 21, 2020, the development team, named Square Crypto, unveiled its first product: a development kit - or software tools - for integrating the Lightning Network. The development kit specifically provided tools to help software developers integrate the Lightning Network with existing bitcoin wallet applications.[22]

Grants[edit]

Square Crypto provides grants to individuals and independent teams for the purposes of researching DeFi and other fintech projects related to crypto and blockchain or to support the maintenance of existing networks and systems.

In September 2019, Square Crypto provided a $100,000 grant to the BTCPay Foundation, a nonprofit that ran the BTCPayer Server - a payment system that some say is a competitor to Square.[23] In December 2019, Square Crypto announced that it would be giving a grant to "ZmnSCPxj," a developer working on bitcoin's Lightning Network, to help the developer's work supporting the network.[24]

In March 2020, Square Crypto announced that independent bitcoin developers Jon Atack and Tankred Hase would receive grants of undisclosed amounts of money. Square said that Atack had been working on bitcoin core development for more than a year, while Hase's work was more UX (user-experience)-focused, with the goal of "simplifying self-custody of smaller amounts of bitcoin, creating a public key server that makes it possible to text sats." ([25]

Wallet development[edit]

Saying that it was part of Square's 2020 Trick-or-Treat initiative, the company tweeted that it was funding Maggie Valentine's work on simplifying "wallet onboarding flows by reducing technical jargon and increasing user education."[26] Valentine said in her proposal that she would focus on "user behavior and sentiment around private key and seed phrase management."[27]

Bitcoin deposits[edit]

In June 2019, Square users, including podcaster Marty Bent, Twitter user Dennis Parker, and a reporter for Coindesk, began noticing that Square had begun offering bitcoin deposits for its Cash App customers in some regions. Square did not formally announce the update, but it was widely reported that the app had begun offering this function to some, but not all, users.[28]

References[edit]

  1. Square works for every business.. Square.
  2. How mobile payment company Square works and how it makes money. Business Insider.
  3. How mobile payment company Square works and how it makes money. Business Insider.
  4. Square checkout systems can now have custom interfaces. The Verge.
  5. Square readers can now read chip cards in just two seconds. The Verge.
  6. Square Hires Ex-Google Director as First Member of New Crypto Team. Coindesk.
  7. Square to acquire Afterpay for $29bn as ‘buy now, pay later’ booms. The Financial Times.
  8. Jack Dorsey Hopes Bitcoin Will Become Web's 'Native Currency'. Coindesk.
  9. Bitcoin Accepted [Everywhere: Square Wins Patent for Cryptocurrency Payment Network]. CCN.
  10. The Company Square Can Now Boast of Its Own Cryptocurrency Payment Network. The Coinshark.
  11. Square Brought in Over $166 Million Through Bitcoin Sales Last Year. The Coinshark.
  12. Bitcoin Revenue in Square’s Cash App Tops Fiat Revenue for First Time in Q1. Coindesk.
  13. Q1 2020 Shareholder Letter. Square.
  14. Square says Cash App generated $875 million in bitcoin revenue during Q2, posting $17 million in gross profit. The Block.
  15. Q2 2020 Shareholder Letter. Square.
  16. Square Puts 1% of Total Assets in Bitcoin in Surprise $50M Investment. Coindesk.
  17. Square, Inc. Invests $50 Million in Bitcoin. Square.
  18. Square, Inc. Bitcoin Investment Whitepaper. Square, Inc..
  19. Square Buys Another $170M in Bitcoin. Coindesk.
  20. Square reports $4.57 billion in bitcoin sales for 2020 via Cash App. The Block.
  21. Twitter CEO Jack Dorsey Launches Open-Source Bitcoin Dev Team. Finance Magnates.
  22. Square Crypto unveils its first product: a developer kit for the Lightning network. Twitter.
  23. Square Crypto provides $100k grant to BTCPay Server. The Block.
  24. Square Crypto offers grant to pseudonymous Bitcoin developer. The Block.
  25. Two more bitcoin developers receive grants from Square Crypto. The Block.
  26. Tweet @sqcrypto. Twitter.
  27. Designing Inclusive Bitcoin Wallet Experiences. Square.
  28. Square Is Expanding Access to Bitcoin Deposits for Cash App Users. Coindesk.