Square’s payment volume is growing exponentially.
As it launched the new Square Stand register last week, the mobile payments company announced that it is now processing $15 billion in transactions on an annualized basis, or $41 million in payment volume per day. These figures do not include Square’s partnership with Starbucks.
(The annual run rate is up from $10 billion in November.)
Assuming a 2.75% processing fee going to Square, that works out to an annual revenue run rate of $413 million, although Square pays out a hefty portion of those fees to Visa, MasterCard, and others.
Back in August, we took a stab at quantifying what the Square-Starbucks partnership might look like. Looking at the latest analyst estimates, we think Starbucks is projected to do $3.7 billion in sales this quarter. If 75% of sales are historically in the U.S. and about half of those come through credit cards, that works out to approximately $5 billion in payments that Square will handle at Starbucks this year.
Again, that Starbucks-linked transaction volume is not included in the $15 billion number cited earlier, or in the chart below.
With Stand, Square hopes to further cement its place in retail while simultaneously warding off threats from competing solutions like Near-Field Communications (NFC), a technology that allows phones to communicate wirelessly with NFC-compatible payment terminals.
As we discussed in our recent report on mobile payments, we believe that software-based solutions like Square are better-positioned to win the mobile payments race because they integrate seamlessly with current consumer behaviour.