I'm curious what the plan is for that $200 million. Obviously Square is printing money at this point, but what other direction do they see to move out from mobile payments?
My guess is maybe they are going to go after other parts of the small biz segment like making e-commerce easier and so on. Ultimately, if Square can get 3% off the top of every transaction a business makes for the vast majority of businesses, there is a lot of money to be made for sure.
> Obviously Square is printing money at this point
Not so sure that's obvious. They're processing a lot of payments for sure, but not all of them are profitable. They spend a lot of money on hardware and customer service. Fraud surely costs a bundle too. It's a business that only makes sense at a very large scale.
Agreed. 3% is an overly optimistic estimate for how much they are making off each transaction since they are charging 2.75% and no per transaction fee and interchange isn't too much lower than that (maybe around a 2 or 2.2% blended rate?) Then you have to account for per-transaction fees, chargebacks, etc.
Given the pricing, I am guessing that they are making anywhere from break-even to 1% on each transaction. At my most generous estimate, that's $80M of annual revenue before any costs, but I'd wager they are pretty damn close to break-even and not making too much, yet...
So I agree with you, they are growing very quickly and have pretty tremendous potential, but I'm not sure I'd say they are "printing money".
Moving internationally costs beaucoup de monies, and scaling way up (another Starbucks) requires them to probably streamline service for that level of client.
$200 million goes fast when take just those two things into consideration. I could see just the UK costing some millions, and the rest of the EU a few tens of millions.
My guess is maybe they are going to go after other parts of the small biz segment like making e-commerce easier and so on. Ultimately, if Square can get 3% off the top of every transaction a business makes for the vast majority of businesses, there is a lot of money to be made for sure.