Headquartered in San Francisco, California, Square is a mobile payment company focused on credit card processing and merchant solutions. The company was founded in 2009 by Jack Dorsey – who is also Twitter’s co-founder and CEO – and Jim McKelvey, and aims to make commerce easy. They started from the principle that every business should be able to make credit cards transactions. Over the years, the company has developed both software and hardware products, as well as business solutions to facilitate commerce. Square’s annual net revenue has passed the one billion U.S. dollars mark for the first time in 2015, up from just over 200 million U.S. dollars in 2012. In the first three quarters of 2016 alone, the company generated more than 1.2 billion U.S. dollars in net revenue. Despite these promising figures, Square has yet to report a profitable year. In 2016, Square’s net loss amounted to 96.8 million U.S. dollars in the first quarter alone.
Transactions accounted for the largest share of Square’s annual net revenue, followed by Starbucks transactions. As the company started to process more transactions, Square's gross payment volume began to increase. In 2012, the San Francisco-based company had a gross payment volume of approximately 6.5 billion U.S. dollars. This figure jumped to 35.6 billion U.S. dollars in 2015. Besides the increase in transaction volume, specialists affirm that both retention of existing customers and successful product launches have driven the growth of Square’s gross payment volume in the last few years. The retail industry is one of the most important markets for Square. As of June 2016, the retail industry accounted for 21 percent of Square’s gross payment volume. Food related industries closely followed with 18 percent of the share, while the services industry had the third largest share.
Mobile and digital payment is indeed a promising market. For instance, consumers in the United States are interested in many mobile payment services and activities. In 2016, about 69 percent of Americans stated that they were interested in using their phones to stop unauthorized transactions. Nearly 50 percent of U.S. consumers said that they were interested in transferring money to another person, such as a family member or a friend, also called peer-to-peer (P2P) payment. In 2016, 45.8 million U.S. consumers used peer-to-peer payment apps. This figure is projected to increase to 75.7 million by 2018. Peer-to-peer payment volume in the U.S. is also forecast to nearly double between 2015 and 2018. Square has its own P2P service, Square Cash; its main competitors in this market are Venmo and Paypal. Mobile wallets such as Apple Pay, Android Pay and Samsung Pay are also increasingly popular in the U.S. About 17 percent of U.S. mobile shoppers already used mobile wallets in 2016.
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