Square Confirms $27.5 Million in New Round of Funding

Square, the mobile payments service that’s taking on Visa and MasterCard, has confirmed it has raised a $27.5 million round of funding led by Sequoia Capital.

The funding, which has been rumored for some time, also includes previous investors Khosla Ventures, which led a $10 million round in late 2009.

The San Francisco-based start-up now has a valuation of around $240 million, up from a valuation of around $45 million in its prior round of funding, according to a person familiar with the matter.

Sequoia Capital’s Roelof Botha, who was a former CFO of PayPal, will join Square’s board.

Square charges either 2.75 percent plus 15 cents per transaction if a credit card is swiped, or 3.5 percent plus 15 cents per transaction if a credit card number is keyed into its mobile application. Square’s dongle, which plugs into an iPhone, is free, and the company doesn’t require contracts, setup fees or minimums like many of the competitors do, making it attractive to small merchants.

Mountain View, Calif.-based Intuit announced today that its GoPayment mobile payment service will offer a free credit card reader and no monthly service fees to business owners who sign up by mid-February. Square also faces stiff competition from Visa, MasterCard and American Express, which are all working on mobile solutions.

The cash will be used to build up the company’s team, which currently numbers 64 employees, including contractors. The company expects to grow its staff to 150 by year’s end, The Wall Street Journal reports.

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