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Square is growing like gangbusters. It revealed yesterday that it’s now processing payments at a $4 billion a year runrate—or about $11 million a day. That’s up from $2 billion a year and $5.5 million a day rate in October. Given that Square takes a flat 2.75 per cent rate on all transaction, this means its daily revenues are up almost 100 per cent in a few months.
In a recent note, we argue that Square offers a great way to examine the mobile payments market. Here are a few key takeaways:
- The market opportunity is huge—offline shopping accounted for 88 per cent of retail last year.
- Square succeeded by creating a product within an existing system—credit cards—while developing technology for its own network
- Payments are a scale business—and not for the faint of heart
We estimated, for example, that Square’s operating losses are an eye-watering $100k+ a day. However, we also estimate losses have narrowed dramatically, down to 39 per cent from 122 per cent a year prior—and will only continue to fall as revenues climb.
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