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Is Squareup.com evaluated too high
Posted by: Curtis Stevens on December 1st, 2009

A new site called Square, has been valued at 40 million and it hasn’t even launched yet. One of its creators is the founder of Twitter.  This may be a big part in their success in funding an evaluation, but my response to that is this.  You have a guy that was lucky and founded a site like Twitter that took off. He hasn’t done anything in my opinion to demonstrate that he is a great entrepreneur.   Twitter has yet to make any money!  The concept of the site is to a be a credit card payment service similar to Paypal.  They promote that anyone can accept a credit card.  Whether it is for some t-shirt sales nor a one-time event.  All you need is a phone that has an audio input jack.  They also claim you can accept credit cards within minutes.

Being in the credit card processing business, I was a little concerned about this once I started reading the article. After reading all of it, I received the impression that this service will be targeted to merchants on the street that have their customers in front of them. There will not be any online sales like Paypal, so no worries in that area. I also don’t see much of a concern with regards to merchants wanting to take payments in-person. I only see very small merchants that would be attracted to this type of service, ones that process so little or infrequently, that they are not profitable merchants. The article also gave the impression it would focus on consumers that simply need to take a payment or two, not merchants with real businesses. The big concerns would be security and it being embraced by consumers. I don’t think many consumers will be comfortable with the setup but time will tell. Either this will turn into a profit or it will sink fast. I give them a year before we see the final fate of this company.



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