Visa makes play in mobile payment space

Visa Inc. has disclosed an investment stake that indicates it has a strong interest in helping retailers process mobile transactions.



In a filing with the Securities and Exchange Commission (SEC), Visa said it holds 3.5 million shares in payment processing provider Square, equal to a 10% stake. The investment was worth about $30 million as of Thursday, Feb. 11.



Visa has been known to be an investor in Square since 2011, but had never indicated exactly how much equity it held. Visa was not listed as a major investor when Square launched its IPO in November 2015, suggesting the company upped its holding after Square went public.



Visa’s substantial holding in Square is interesting for a couple of reasons. First, it is vote of confidence in Square, which provides apps and hardware for retailers to accept mobile and card-based payments and also processes payments on the back end. In October 2015, Square exited a payment processing deal with Starbucks that the company estimated had produced a $56 million loss.



Second, it shows that Visa is interested in mobile payment. While Square does not strictly provide mobile transactional processing, it is best known as a mobile payment company with a focus on smaller retailers that use its apps and reader to accept mobile payments.



Visa does have a presence in mobile payment, but investing in Square allows the company to hedge its bet and also possibly integrate Square functionality into its own offering, or offer some type of cross-branded mobile payment platform.