If the company is successful, it will have quadrupled its worth since raising $100 million at a $1 billion valuation only 10 months ago.

While that would be astonishing for a three-year-old company, it’s important to note that negotiations continue, and that investors could ultimately value the company at a slightly more modest number (hmm, like $3 billion?!).

A Square spokesman declined to comment.

Square, which was founded by Twitter inventor Jack Dorsey, has quickly made accepting credit cards via a mobile phone into a mainstream and affordable concept for small merchants.

Over the past year, it has quickly expanded beyond handing out magnetic-swipe readers to offer more robust experiences for both consumers and merchants, including software on the Apple iPad that acts like a register, and software on the iPhone that is a virtual wallet.

The payments method has received a warm reception from mostly small businesses, including taxicabs, food trucks, coffee shops and even lawyers and accountants.

The rumors of Square looking to raise more capital started spreading after Owen Thomas, formerly of the Daily Dot, noticed that Dorsey and Square’s COO Keith Rabois were in Boston and Baltimore, where many institutional investors are based. Thomas called Legg Mason, which confirmed it was looking at the San Francisco company.

Previous investors in Square’s three rounds, totaling roughly $137 million, include Kleiner Perkins Caufield & Byers, Tiger Global Management, Sequoia Capital, Khosla Ventures, Visa and well-known entrepreneur Richard Branson.

The big question is whether Square will be able to demand such a hefty valuation.

To determine that, based on what is known about the company, I did some back-of-the napkin calculations to come up with its annual revenue.

Last month, the company said it is now processing $4 billion in annual transactions. Since we know that Square charges 2.75 percent per swiped transaction, and 3.5 percent plus 15 cents per keyed-in transaction, we can start to get a better picture of its finances.

Let’s assume that a quarter of the company’s transactions are keyed in — which demands the higher rate. That would mean the company’s revenue would total nearly $83 million for swiped transactions, and $35 million for keyed-in transactions. Because of the additional 15-cent fee per transaction, let’s add another $15 million (which might be generous, but would break down to 100 million transactions at $10 apiece).

In all, the company’s annual revenue would then be close to $122 million.

Most, but not all of that revenue, is then handed over to the credit card companies for processing fees.

To be sure, the company has grown quickly since its inception, and has its eyes set on the very large point-of-sales market. This year, Square said it had plans to expand internationally, and has just hired a new executive from PayPal to take the lead on the effort. In the future it could also generate revenue from advertising or other loyalty programs, although it does not today.

But, by at least one historical measure, the valuation is rich beyond belief.

PayPal, which was also looking to disrupt the banking industry by enabling peer-to-peer payments online, was sold for $1.5 billion to eBay in 2002, just months after going public at a valuation of nearly $800 million.

At the time it went public, the company was roughly doubling year over year and had generated $103.7 million in 2001, its first full year of operations — or slightly less than Square’s estimated revenues.

Much like PayPal back then, Square faces intense competition, making alliances with much larger companies or raising big war chests critically important.

Square faces stiff competition and pricing pressure from Intuit, eBay’s PayPal, Google and other upstarts, like Pay Anywhere.

Still, it has made a splash that is seeing major reverberations around the sector, which a big valuation will make larger still.

“This is the bigger opportunity we see under real-time commerce, based on the adoption we’ve seen with our members and the feedback from the restaurants,” said Greg Mazanec, LivingSocial’s general manager for Takeout & Delivery.

The move is a big step away from the company’s roots of offering large discounts to draw patrons into a store or restaurant. But the step also raises the broader question of whether mobile commerce — as we’ve envisioned it for years — will ever take off.

For the past decade, mobile executives and others have promised that, someday, consumers will be alerted of nearby deals or specials on their phone as they walk by a coffee shop or a restaurant. For example, a free latte with a purchase of a scone, or free fries with a burger and milkshake.

More recently, LivingSocial and Groupon were considered clear front-runners for bringing that promise to scale, because both have a large user base and a dense enough footprint of local businesses for it to work. But now LivingSocial is downplaying the idea of location-based offers, a year after launching.

Groupon, which launched a competing product called Groupon Now soon after LivingSocial Instant, continues to offer these real-time deals.

Mazanec declined to say how Instant performed financially, but said it was the company’s first attempt at “real-time commerce,” and it turned out that the response for takeout and delivery had been extremely high. ”It was the repeat behavior that was important to us,” he said.

Now the value is centralized around convenience instead of discounts. That’s something merchants generally like more, too. Instead of offering discounts to people who may have already been looking for a latte or a burger, now they are drawing in more people at full price.

Mazanec describes the nearby Mexican restaurant that already had a long line during lunch. He said the only way for them to sell more food without expanding physically is to offer takeout and delivery.

“Consumers aren’t pulling their phones out to search for the nearest real-time discount on a car inspection or framing service. They are, however, looking for a faster and better way to order food from their favorite local restaurants,” he said.

Now, Takeout & Delivery will replace Instant on the LivingSocial apps.

The mobile app allows users to place and pay for orders for either pickup or delivery. On the back end, the restaurant receives the order by fax, and is able to say how long the order will take to fill. Consumers who show up for takeout are directed to a specific line and can pick up their order without having to pay. Restaurants that offer delivery are responsible for supplying the drivers.

Discounts can always be layered on top of the transaction if a merchant wishes, but it’s no longer the starting point. LivingSocial shares the revenue from the transaction.

“This helps broaden our offerings and puts us in a place where we can offer fast casual to five-star gourmet,” he said.

By adding the service, LivingSocial also starts competing with other delivery services that have declared this to be a big market opportunity.

Seamless, a New York company focused on online delivery and takeout, recently acquired MenuPages and booked more than $400 million in orders last year. And GrubHub, a Chicago-based company, recently raised $50 million and acquired Dotmenu and Allmenus. GrubHub projected that orders would hit $225 million in 2011.

Over the past year, Amazon has slowly been entering that space, aiming to go up against industry-leading Groupon.

So far, it has done fairly well. For example, Amazon is the fourth-largest daily deal provider in the U.S., following Groupon, LivingSocial and Travelzoo, according to Yipit, a deal aggregator that closely tracks the major players.

Starting early tomorrow, the company is planning a publicity stunt to raise its awareness even further, by posting $10 Amazon.com gift cards for five bucks.

The offer will be distributed on the AmazonLocal site, via email and on some Kindle devices, and has the potential to sell out, since limited quantities will be available. (Don’t get too excited, it’s limited to one per customer.)

As part of the promotion, Mark Eamer, a director of product at AmazonLocal, provided a glimpse into the company’s plans in the crowded local deals space (but that’s pretty good, considering the company’s corporate culture to not disclose much of anything).

Offering gift cards is a common way for companies in the space to drum up new subscribers, even though the companies often lose money. For example, last year, LivingSocial sold 1.3 million $20 Amazon gift cards for $10 apiece, Groupon pawned discounts for Barnes & Noble, and more recently, Google offered up gift cards from REI.

Eamer said this represents the first time it has sold gift cards for Amazon.com, but in the past, it has sold deals for other Amazon-owned properties, such as Diapers.com and Soap.com.

Up until now, most of AmazonLocal’s growth has been supported by the $175 million strategic investment it made two years ago in LivingSocial. Nine months ago, Amazon launched its first local deals site in Boise, Idaho, with the help of LivingSocial, and today it operates in 90 markets across 26 states and the District of Columbia.

Eamer said that even now most of the deals listed on the site come from LivingSocial, although AmazonLocal is hiring its own sales team in Seattle and in other locations to help source deals. He declined to say how many people work in the division.

Still, it’s clear that one of Amazon’s advantages in getting merchants to work with them over a competitor is its scale, he said.

Eamer would not disclose how many subscribers have signed up for AmazonLocal, but overall, the company has 164 million active customer accounts worldwide, defined as people who have made a purchase on the site in the past 12 months.

“There’s lots of competitors in this space, and we all want attention from the merchants. By far and away, they [merchants] answer the phone and want to hear what we have to say. We have relationships with millions of merchants around the world, and 164 million customers worldwide. We know how to work with merchants and connect with customers — it’s unique to Amazon.com.”

In the future, Eamer said, AmazonLocal would be open to talking to other providers beyond LivingSocial to bring more offers to the platform. “We would consider it and evaluate that as time goes on, or as another relationship presents itself,” he said.

Amazon’s success in the space is important not just because it is interested in going up against Groupon, but because it uses offers to discount the price of its hardware, including the Kindle e-readers. For instance, a Kindle Touch “with special offers” costs only $99, but one without offers — a.k.a. ads — is $139. In other words, if it can subsidize the cost of its hardware through the use of these offers, it can compete more deftly against Apple and others in the tablet space.

Another goal for the year is to continue to refine its targeting abilities. Currently, offers are only delivered to people based on geography only.

“One of our key tenets is delivering the right deal to the right person at the right time … Our targeting is limited by geography, but we’ll be working on some things in 2012.”

Of course, in the case of tomorrow’s Amazon.com gift card, it will be sent out to everyone.

Of course, you knew at least a little bit would slip through.

In response to an analyst who asked about the company’s ability to tailor deals to a person’s interests, Mason hinted at new products coming in the first or second quarter.

In addition to being able to get deals based on multiple locations, gender and past buying behaviors, he said, users will be able to vote down deals if they don’t want to receive similar ones again.

So, if you are male, you won’t have to see offers for bikini waxes, or if you are bald, you won’t have to see offers for barber shops.

Mason said, “It allows us to say, ‘Please stop sending me pole-dancing lessons.’ … That’s been a much requested feature.”

Otherwise, Mason quickly and confidently answered inquiries throughout the call.

But he didn’t talk much about future financial expectations, instead emphasizing the company’s merchant services, new investments (such as its mobile products) and new categories (like products and travel).

So far, few details have been shared on the impact of those offerings, including Groupon Now, which is available in 31 U.S. markets and allows customers to purchase deals that can be redeemed in a short time window. Groupon’s travel site has also gotten quite big through the help of its partner Expedia.

Groupon CFO Jason Child explained that all of the investments are really at an early stage, and it’s uncertain how they will be impacted by seasonality or other economic factors.

The strategy remains to invest in the future, Mason said. “The Groupon of five years from now will require investments in technology and innovations. Despite rapid growth, we estimate that we participate in less than 1 percent of all local transactions.”

Still, the forward-looking statements weren’t enough to satisfy investors who were looking for the company to show a small profit.

For the fourth quarter, Groupon reported a net loss of $42.7 million, or 8 cents a share, compared to a net loss of $378.6 million, or $1.08 a share for the same period in 2010.

Mason concluded his first earnings call by saying: “Thanks, guys, this was a lot of fun, and I look forward to many more of these.”

And then the stock was clobbered in after-hours trading, falling nearly 15 percent, or $3.68 a share, to $20.90.

In a three-story building in Palo Alto, Calif. — formerly occupied by Danger, the developer behind the T-Mobile Sidekick — Groupon has been trying to build out a Silicon Valley technology center, one acquisition at a time.

The pursuit was kicked off two years ago with the purchase of mobile app development shop Mob.ly. Mihir Shah, the company’s CEO, started recruiting for the social buying company, and then became the Groupon’s VP of mobile.

Since then, there has been a hodgepodge of acquisitions, including Campfire, which builds chat, calendar and media-sharing tools, as well as Zappedy, which makes a platform for merchants to redeem Internet-based offers more easily.

Last week, it continued with Adku, a low-profile San Francisco start-up that helps e-commerce retailers fine-tune their recommendation engines using external factors, such as whether it is hot or cold outside.

None of the teams have been extremely big or expensive, but Groupon insists that they already are having a major impact on the company.

That may be hard to believe in a company of more than 10,000 employees, most of which are salespeople who are not working on technology.

But Adku’s co-founder Carlos Whitt, who is joining the company along with five others from his team, said the entrepreneurial vibe in the building is “ridiculously exciting.”

“The opportunity, the innovation and entrepreneurs are all there,” he said. “It’s a good intersection.”

Still, Groupon has not been able to attract every entrepreneur it pursues. It had been actively trying to buy other social start-ups, such as Gowalla. That particular deal went to Facebook. Another would-be Groupon acquisition target, Clever Sense, was won by Google.

No matter, according to Mob.ly’s Shah, who said Groupon is actively evolving beyond a daily deals service into a company that builds a set of key marketing tools for local merchants that increases sales, cuts costs and boosts productivity.

Some of the early tools include online calendars to make it easy for spas or gyms to book appointments online, and rewards programs that allow merchants to identify loyal customers who return and spend a lot of money.

Groupon also recently revamped its merchant center, where its customers can manage their daily deals and other programs in an online dashboard.

Shah said the idea is to create a marketing suite that makes small businesses more efficient and productive.

“We never want to stand still and be a big company,” he said.

But the big question is whether those tools will be sticky enough to keep merchants coming back to offer new deals, which is where Groupon gets all of its revenue from. That’s because most of the new tools are expected to be given away for free and not generate any additional income — at least for now.

It will also have to be enough to keep away other close competitors, such as LivingSocial, Google and Amazon.

The ability to spur innovation and keep ahead of rivals will be on the minds of analysts when Groupon reports its first financial results as a publicly held company this afternoon.

Wall Street is expecting the company to report three cents per share profit on revenue of $475 million in its fourth quarter earnings, according to Thomson Reuters.

That’s up from $430 million in revenues in the third quarter and will be Groupon’s first profitable quarter in nearly two years

In particular, analysts will be listening for updates on some of the company’s core programs, such as Groupon Now, which is its mobile product that allows consumers to purchase deals minutes or hours before redeeming them based on their location. Other metrics may be shared regarding loyalty and retention programs.

This is also Groupon CEO Andrew Mason’s first big chance to speak to the investment community since the end of the company’s quiet period (which he wasn’t really good at keeping, anyway).

Groupon’s stock increased nearly three percent yesterday to close at $24.19, which is just above its IPO price of $20 a share.

The Mountain View, Calif.-based company tries to boost online companies’ revenue by placing targeted promotions and offering incentives at the point of checkout.

It’s a bit similar to how grocery stores try to boost sales by strategically placing tabloid magazines, gum and candy bars at the register to spur last-minute impulse buys.

Instead, TrialPay makes last-minute offers to give people incentive to make a purchase when they are on the fence.

As an example, TrialPay’s CEO Alex Rampell said that when people visit Fandango’s site, they may get an offer for a free movie ticket if they sign up for Netflix. Or, in a Zynga game, you might be offered a virtual bouquet for free, in return for purchasing real flowers on Valentine’s Day.

Visa’s participation in the investment, which is being announced later this morning, is rare. Over the years, the payments company has made a few acquisitions, including PlaySpan, CyberSource and Fundamo, but Visa’s only investment in recent memory was in payments darling Square, which allows anyone to accept payments using a cellphone.

Rampell said that with Visa’s help, TrialPay will be able to expand to offline merchants from working exclusively with online retailers, by giving it a way to track if a person visited a store and made a purchase.

“The question is, how do we send traffic to Starbucks or McDonald’s or any other offline merchant?” Rampell said. “We already have access to people online who are buying or thinking about buying something. It would be great if we could could give you 20 virtual coins if you shopped at McDonald’s. But how do we close that redemption loop?”

Today, TrialPay, which has 130 employees, reaches more than 70 million monthly active users worldwide. In 2011, Rampell said, revenues more than doubled; he declined to offer specifics.

Rampell also declined to provide details about potential partnerships with Visa. Visa also declined to comment.

Investors in the company’s fourth round included new investors Greylock Partners, Visa Inc., T. Rowe Price, DAG Ventures, DFJ Growth and QuestMark Partners. Existing investors also participated. To date, it has raised roughly $70 million.

For more of Rampell’s opinions on how the payments space will evolve, check out his Web 2.0 speech from October:

Rakuten is set on challenging Amazon’s global dominance by appealing to the third-party merchants Amazon works with today and by growing it’s digital content business to compete with the Kindle.

We recently learned about the company’s strategy through the eyes of Neel Grover, the CEO of Buy.com, Rakuten’s online shopping subsidiary in the U.S.

For now, Rakuten is admittedly Amazon’s much smaller competitor, though it is dominant in Japan.

The publicly held company is worth $14.5 billion compared to Amazon’s $85 billion market capitalization, and it pales in comparison to Amazon’s mass in the U.S. Buy.com is ranked 410th here versus Amazon’s sixth-place standing, according to Compete.

But Grover said Rakuten has a two-part plan for going up against Amazon.

First, it will target and partner with third-party resellers and merchants.

Amazon does this, too, but often ends up competing with the merchants because it has its own warehouses and products that it is selling, he said.

“Oftentimes Amazon will compete with the retailer. [Third-party merchants] teach Amazon what to buy and sell, which is ultimately not good for the merchant,” he said.

Rakuten, on the other hand, does not own any warehouses or any inventory itself and instead gives retailers — brick and mortar or e-commerce — the tools and traffic to support their own businesses.

In May 2010, Rakuten acquired Buy.com.

“I sought out Rakuten. … I thought their model was one that would give us a unique differentiator in the U.S. and we could learn and bring their model to our site and customers,” Grover said. “We are still in the final stages of transforming, and it’s taken a bit of time to get it transformed.”

But, he confidently added, “It will win out in the long-term.”

A similar approach is being taken by eBay, another e-commerce giant in the U.S.

The second part of Rakuten’s plan is to go after Amazon’s growing digital business, spanning music, e-books and other content.

In November, the Japanese company purchased Kobo, a runner-up in the e-reader race behind the Kindle and Barnes & Noble’s Nook. It paid $315 million in cash for the Canadian company.

Rakuten is banking on the Kobo in assisting with its move into providing downloadable media to consumers, starting with e-books.

At the time of the acquisition, Kobo CEO Michael Serbinis told All Things D that Rakuten will give Kobo the financial backing to grow internationally, as well as compete in the U.S.

“The U.S. is absolutely important. It’s fundamental. We have millions of U.S. users today, and we plan to grow that substantially, and internationally it represents a big opportunity as well,” he said.

Earlier this month, Buy.com started linking to Kobo from its site, so that consumers have the option of buying a physical copy of a book or a digital version. Other integration efforts are also under way.

It also wants to get into other digital content, like music. Back in 1999, Buy.com was one of the original sites to have a digital music store, but Grover said it was a pretty poor experience because of all the restrictions that record labels were mandating. A lot of that has now changed.

“We are definitely looking as a group at all digital content. … We are looking at different solutions, but today we have not continued on with our initial music store,” he said.

As with Kobo and Buy.com, acquisitions are always an option, he said.

“We’ll continue to look at everything that would make our business better. It hasn’t been shy over the past two years. We have a global vision to create an e-commerce marketplace offering all goods, and we continue to see that grow.”

And going up against Amazon, some serious growth is what Rakuten and Buy.com will need.

Gupta joined the company 18 months ago after Google acquired Jambool, a virtual goods payment platform where he was a founder and CEO. More recently, he’d been one of the leaders on the payments team, overseeing Google Wallet and reporting to Osama Bedier, Google’s VP of Payments.

“I can confirm that Vikas has left Google and we wish him all the best in his future endeavors,” a spokesman said.

Jambool’s product, Social Gold, was rolled into Google’s payment products and is being used for in-app purchases on both Android Market and Google+ Games.

According to Gupta’s LinkedIn page, he joined Google in August 2010 and held the title of head of consumer payments. Jambool reportedly was purchased for $55 million before any additional earn-outs. Prior to founding Jambool, Gupta worked at Amazon.

Gupta’s departure is the second management move made in the Google Wallet ranks over the past week.

A spokesperson declined to say if the division was undergoing a wider restructuring, but last week, I reported that Google’s VP of Commerce Stephanie Tilenius was moving into a more global position. And, as part of that, Bedier will be taking on a larger role within Google Wallet, though his title will not be changing.

The Wallet is Google’s mobile payments strategy that allows users to tap their phone at the register to pay using near field communication technology. The company has already successfully formed alliances with both banks and retailers, and is leveraging its vast install base of Android users.

Today, it is live with some merchants, although it does face some challenges.

Currently, it only works on one phone from Sprint, and both consumers and merchants will most likely have to upgrade their hardware for it to work. Additionally, some carriers, such as Verizon Wireless, have decided to disable Google Wallet on phones they are shipping. Other carriers, which are part of a mobile wallet joint venture called ISIS, are expected to follow suit, effectively limiting access for many U.S. consumers.

More than six months after hosting a flashy launch event, the business may be getting a lot harder than it originally looked.

In November and December, the number of online transactions increased by 37 percent, and overall sales jumped by 25 percent. But the average ticket size declined by 9 percent, according to Chase Paymentech, which analyzes information across the top 50 e-commerce retailers.

As it turns out, more consumers are turning to e-commerce for more of their everyday spending, rather than reserving online purchases for big-ticket items.

Here are Chase’s three reasons for the decline:

• More consumers are purchasing digital media, which has a lower price point than most physical goods — MP3s cost less than CDs, e-books cost less than paperbacks, and apps cost less than game cartridges.
• Prices for popular electronics, such as tablets, e-readers and TVs, are falling.
• More retailers are offering free shipping, which eliminates the incentive to fill carts to reach a free-shipping threshold.

EBay, which is the first major e-commerce provider to report Q4 results, confirmed it was also seeing the trend. The company’s payments division, PayPal, reported smaller transactions during the fourth quarter across the merchants it serves.

John Donahoe, eBay’s CEO, explained in an interview that the biggest driver of that trend was eBay’s acquisition of Zong, a mobile payments provider that powers the sale of digital goods. In addition, Donahoe said retailers, including eBay, heavily discounted products in order to drive more purchases this holiday.

Amazon, which is the leading e-commerce provider, also said that it is selling a lot of low-priced digital goods, ranging from e-books to MP3s.

Historically, the company has said that Christmas is the largest day of digital sales on Amazon.com, followed by Dec. 26. In 2010, from Christmas Eve through Dec. 30, Amazon customers purchased three times more digital content — including Kindle books, magazines, movies, TV shows, music and digital games — compared to the weekly average for the year.

Despite transactions declining overall, Chase identified two exceptions: Apparel and footwear rose 6 percent; toys rose 10 percent year over year.

(Amazon photo courtesy of thisisbossi)

The company, which plans to launch soon in the U.S., has created a way for people to easily give gift cards to their friends through social channels such as Facebook.

Greylock will contribute $5 million to the company’s first round, increasing the total to $10.5 million. Creandum — along with Atomico, which was founded by Skype co-founder Niklas Zennström — invested in the round last year.

“The gift card industry has grown to a $100 billion industry, and yet very little innovation has been done around social networks and smartphones,” Hoffman said in an interview. “You put those two things together and suddenly you get a much easier way to give.”

The funding will be used to launch the service in the U.S. and the U.K. this quarter, with other markets following.

The social gifting service has three components:

First, people can learn about their friends’ birthdays or other occasions on Facebook, or through notifications on their mobile phones.

Second, users will be able to give friends gift cards that mutual friends or family members will be able to contribute to on Facebook.

Third, Wrapp is partnering with retailers and merchants which will also contribute $5 or $10 to the card.

The logic is that if many people are willing to contribute to a gift card, the gift becomes more meaningful. Retailers are willing to participate because it might drive traffic to the stores and get consumers to buy something that they normally may not have bought.

Wrapp was started 2011 by Hjalmar Winbladh and others, including Andreas Ehn, Spotify’s founding CTO, and Carl Fritjofsson, an advisor to Groupon.se.

Wrapp is currently growing more than 30 percent every week in Sweden, where it is working with more than 25 merchants. Already, 2 percent of the nine million residents there are considered active users of the service.

“It’s certainly showing a great early curve in Sweden, and we have every expectation the curve will be replicated in other places, like the U.S.,” Hoffman said.

Although the season kicked off with a bang, there were fears that consumer confidence would fall as the end of the year approached. That did not happen, with people continuing to fill their virtual shopping carts until the very last minute; 10 individual days surpassed $1 billion in spending.

According to comScore, the final tally for online spending for the months of November and December was $37.2 billion, representing a 15 percent increase over last year.

ComScore tracks purchases made on Web sites from a fixed Internet connection, excluding spending done via mobile phones and tablets, so presumably the numbers could be higher.

While the numbers being reported sound positive, some analysts worry if they were enough to give giants like Amazon the growth rates needed to hit expectations. Wall Street analysts are expecting Amazon to post a fourth-quarter growth rate of 38 percent, which would mean it would have to be growing twice as fast as the average market.

But Chase Paymentech’s annual Cyber Holiday Pulse Index painted a rosier picture of the holiday season. Based on tracking 50 of the leading online merchants in the U.S., the report found that during the final two months of the year, transactions were up 37 percent and sales rose 25 percent.

One of the reasons for the huge gains, it said, was because Christmas fell on a Sunday this year, allowing merchants to guarantee shipping much later into the week and giving consumers more time to make online transactions.

To be sure, the increase in online shopping is coming from somewhere — most likely at the expense of traditional retail, which is expected to report a less impressive 4 percent growth rate this year.

“It’s clear that e-commerce continues to gain market share from traditional retail due to the attractiveness of the Internet’s convenience and lower prices,” said comScore Chairman Gian Fulgoni. “Consumers were especially attracted to the deals and discounts available through digital channels -– particularly free shipping, which occurred on well over half of transactions this season.”

The most impressive finding of the season was that 10 individual days surpassed $1 billion in spending, compared to only one day in 2010.

Here is a list of the 10 biggest online shopping days in 2011, led by Cyber Monday:

(Image credit: iStockphoto.com/mbortolino)

The payments company will be using the name V.me to differentiate it from its more well-known services found at thousands of retail locations around the world.

Consumers will be able to fund the digital wallet using a variety of sources — a Visa, MasterCard or bank account.

It will be used to check out online using a user name and password, rather than having to key in the 16-digit number each time. The idea is similar to eBay’s PayPal, and to services by Amazon as well as e-wallet services being developed by American Express.

It will also be useful for checking out while shopping from a browser or application on a mobile phone or tablet. Later next year, Visa plans to roll out mobile payments to the register, where consumers will be able to tap and pay using near field technology.

The digital wallet is in a closed beta today but will be coming out in early 2012, after the holidays.

Jennifer Schulz, Visa’s head of product, strategy and innovation, said the wallet is intended to be open and funded through sources outside of Visa, and therefore “we wanted [the brand] to evoke Visa, and link to it, but without saying Visa.”

To accelerate the adoption of Visa’s payments services, including V.me, Schulz said Visa is unveiling a new developer program that will give anyone, including retailers, merchants and start-ups, access to its payments services.

The tools give mobile developers easier ways to accept payments on the phone, and help game developers that want to sell low-priced digital goods. There are also tools for big-box retailers.

American Express is also trying to woo developers, but rather than focusing on opening up its platform to developers, it has created a $100 million fund to invest in digital commerce opportunities.

Visa’s developer center brings its subsidiaries — including Authorize.Net, CyberSource, Fundamo and PlaySpan — together under one roof.

“We are announcing the Visa Developer Center, which is our platform for engaging developers globally with our Visa payment solutions,” Schulz said. “It provides us with a platform for engaging an important set of constituents.”

The Washington, D.C.-based company will also be trying out a poorer-man’s option, called Instant Ordering, that offers takeout and delivery from a wider selection of restaurants.

Both services will be offered at full price, breaking the company’s tradition of offering deep discounts to restaurants, spas and other experiences.

Initially, the services will be available in LivingSocial’s hometown as the kinks get worked out of the system, but the company has ambitions to take it wider.

“We think it’s going to really resonate with people,” said Tim O’Shaughnessy, co-founder and CEO. “If merchants can figure out how to expand their tables outside their restaurant, that’s a whole new revenue stream and introduction to people for them.”

The Instant Ordering service will leverage restaurants that already have existing delivery or takeout options, but Room Service will be for restaurants that have never tried it before. LivingSocial will provide the vans and the delivery personnel, and will drop off the food at a designated time. It will also pick up the plates the next day.

It sounds a little bit like Kosmo, the venture-capital-backed free delivery service that exploded during the dotcom boom, but Room Service is working with high-end restaurants, which probably have larger margins to play with than a movie rental or a pack of cigarettes.

In a description of the service, LivingSocial writes: “Along with an elegantly plated meal on ceramic dishware, we’ll provide you with everything you need, from a cloth napkin to candles. As for those dirty dishes? We’ll take care of those, too. Just place them in a LivingSocial Room Service container, leave them outside your door the next day, and we’ll pick them up.”

We hear there’s chocolate for dessert, too. Just not on your pillow.

Starting on Tuesday, 70 merchants will be participating in the company’s Instant Ordering service; Room Service will kick off on Thursday and Friday with just one. The service’s guinea pig is D.C.-based Kushi, a sushi restaurant co-owned by Ari Kushimoto Norris.

Kushi will offer two set menus for $66 each. The first offers several small plates, including shrimp and pork skewers, with a plate of sushi. The second offers vegetarian small-plate options, such as mushrooms and soba noodles with a plate of sushi.

Kushimoto said the price compares to a meal at the restaurant, with tip included. An undisclosed portion of the revenue will go to LivingSocial. O’Shaughnessy explained that the value of Room Service is not in the discount that the company is typically known for giving, but in the convenience and experience of the service.

Kushimoto said she believes it will be an attractive service for working families that don’t have a babysitter, but have the capacity to spend money on a regular basis in restaurants.

One of the challenges she dealt with in early trials involved retaining the quality of the food — in other words, keeping the warm plates hot and the cold plates chilled. But delivery is something Kushimoto has always wanted to try. Since LivingSocial is hiring the delivery drivers and promoting the service, she doesn’t have to worry about taking on the risk of hiring extra personnel before it takes off.

Both new services will be part of the company’s “Instant” offering, which include being able to buy a discount via a mobile phone and redeem it in a matter of minutes. Instant is currently live in 22 metropolitan areas.

So far, the variety of merchants offering deals in any particular neighborhood can be low, but by offering a list of options, where you can get take-out or delivery, the catalog will grow, albeit at full price. Of course, merchants will have the option of offering a discount, and users will be able to redeem prior offers.

But in this game of one-upmanship, Square has thrown down the gauntlet by announcing this morning that it has made the payment process hands-free.

The San Francisco company, which was recently valued at $1 billion, said it has made it as easy to pay as saying your name.

A new version of its application, called Card Case, will leverage geo-fencing capabilities in Apple’s latest operating system update for the iPhone. The technology will identify when a person is within 100 meters of a favorite merchant.

Square’s Director of Products Megan Quinn explains that when a shopper is within range, a tab at that establishment will automatically open — without that person ever touching his or her iPhone. Once the user places an order and goes to pay, all they have to do is give their name.

The merchant will see on its iPad that a tab has been opened in that person’s name from inside the Square app.

Once a customer gets outside of the 100-meter range again, the tab will automatically close, whether a transaction was conducted or not. In theory, this means it would only be open for a few minutes if the shopper simply walked by a coffee shop and didn’t stop.

In addition to having to have an iPhone with the latest operating system, the consumer will also have to designate shopping establishments at which tabs could be automatically opened.

Since Square opened it up eight weeks ago, 20,000 merchants nationwide have joined the Card Case app’s directory.

In May, Square unveiled its mobile payments strategy for small retailers, including the iPhone and Android applications for consumers and the iPad software for merchants. Before that, it had focused primarily on allowing small businesses to accept credit cards using a swipe accessory plugged into a smartphone’s headphone jack.

Quinn said the most obvious benefits to the new features are speed and ease of use; however, there’s a more touchy-feely reason, too. “We’ve removed the artifacts from the experience, so it’s about the interaction between the merchant and the customers.”

In other words, it’s like walking into Cheers, where everybody knows your name.

[Photo credit: Wikipedia.]

The daily deals giant cut back on marketing expenses and still showed it could make a profit in North America, plus it delivered on a number of other key metrics.

Marketing costs are the primary way Groupon gets subscribers to sign up for its email list that offers a deal every day and therefore is the lifeblood of its growth engine.

But it is also costly and unsustainable.

In today’s filing with the SEC, it showed it could continue to grow despite reducing its marketing expenses by 20.4 percent during the quarter in the U.S. alone.

Here are some key takeaways from the quarter as compared to the prior quarter on a worldwide basis:

• Revenues before the merchant’s cut: $1.16 billion vs. $929 million
• Subscribers: 142.9 million vs. 115.7 million
• Paying Customers: 29.5 million vs. 23 million
• Participating merchants: 78,649 vs. 78,466
• Groupons sold: 33 million vs. 32.5 million
• Average revenue per subscriber: $3.30 vs. $3.90
• Average revenue per Groupon sold: $13 vs. $12.1
• Groupons sold per paying customer since 2009: 4.2 vs. 4
• Total unique paying customers: 16 million vs. 12.1 million

Saverin, who also helped inform the plot of Aaron Sorkin’s “The Social Network,” invested in the company’s $6.5 million round back in March. He will also oversee the company’s entrance into the Asian market, although today the company is launching in the U.S. and Europe.

The goal of the Mountain View, Calif.-based company is to make entering a user’s credit card information into an online form a snap, while also making it much more secure, according to Jumio Founder and CEO Daniel Mattes (pictured right).

It works like this: To purchase something online, consumers hold their credit card in front of their webcam. The card is quickly recognized and verified without taking a picture or storing the data on the computer. The information is then entered in the correct format.

The technology will soon also be adapted for mobile phones so merchants can accept payments in person by using the phone’s camera.

Mattes said it solves two pain points — usability and security.

During trials, he said Netswipe was able to decrease the number of consumers who abandoned their purchases at checkout to 21 percent from slightly more than half. It can also cut down on fraud, because consumers must have the actual card in hand.

“It’s almost impossible to make and use fake cards. We can detect if the type is embossed or if there is a hologram,” Mattes said. “We spent a lot of time and money and effort on accuracy.”

With so many advances taking place in the payments space right now, the technology is already similar to a couple of solutions on the market.

First, there’s Square, the well-backed San Francisco start-up, which has created a card reader that plugs into either a cellphone or a tablet, so that payments can be accepted cheaply and easily in person. Second is Card.io, which captures payment data by holding a credit card up to a phone’s camera to automatically read the card information and enter the appropriate data.

Mattes said Jumio is “like Square for online,” although Jumio will also soon be coming out with a mobile version for making in-person payments.

Jumio will have three products initially, which will let merchants decide how comprehensive a payment network they want. If merchants only want to use the scanning technology via the webcam, it costs 15 cents a scan; for more comprehensive services, smaller merchants will pay a flat rate of 2.75 percent per transaction with no set-up or monthly fees.

So far, Mattes said Jumio has five merchants signed up, but he wasn’t willing to name them at this time.

New investors Singapore’s EDBI, SingTel Innov8, and Motorola Solutions Venture Capital join a handful of existing investors, including Alloy Ventures, Citi Ventures, Draper Fisher Jurveston, DFJ Gotham, First Data, Miven Ventures, Motorola Mobility, Nokia Growth Partners and NCR.

To date, the company has raised $90 million.

ViVOtech’s near field communication technology is being used by Google to enable Android users to tap their phones at registers to make a payment.

Google unveiled its mobile payments and offers initiative last month, and since then a lot of interest has poured into the space, with other companies, such as Square, American Express, Visa and others coming up with several alternatives.

The 10-year-old Santa Clara, Calif.-based company is providing the NFC-enabled point of sale readers to merchants also participating in Google Wallet. So far, the company has shipped more than 600,000 readers in the U.S., which are all capable of accepting Google Wallet payments.

The new funding will be used to expand internationally beyond the 35 countries it serves today.

That’s when a merchant gets bombarded with unprofitable customers who spend no more than the coupon is worth and have no intention of ever returning.

A New York start-up believes it has a solution for high-end restaurants, which like the idea of filling empty tables but are terrified at what a coupon deal might do to everyday business.

The company has relaunched as Savored.com (formerly VillageVines) and is doubling the number of markets it serves to 10.

It may be on to something. In the past six months, the company has grown from six employees to 45 and has increased reservations by 335 percent and subscribers by 228 percent. Additionally, participating restaurants are on track to generate more than $25 million in sales this year.

Savored co-founder Ben McKean tells us how it works:

Members who sign up for the service pay $10 to book a reservation at a restaurant and in return get 30 percent off their entire bill, including alcohol. The restaurant keeps all of the profits.

That differs significantly from daily deals sites, which typically keep half of the revenue from a voucher that is already 50 percent to 70 percent off.

McKean said the model is completely different.

Restaurants alert Savored.com to a specific number of tables on specific nights that they know they won’t be able to fill on their own. Savored.com helps them fill those otherwise empty tables, just as Priceline helps hotels fill empty rooms or airplane seats.

“The restaurant knows it will have an empty table,” McKean said. “They know their traffic patterns really well.”

Some of the 500 participating restaurants are high-end names like Daniel Boulud, Jean-Louis, Peter Kelly’s Xaviars, Capital Grille, China Grill, Aquavit and the Patina Group. The service is live in Atlanta, Boston, Chicago, Denver, Los Angeles, Miami, New York, Philadelphia, San Francisco and Washington, D.C.

An important part of the process is discreetness: The need to print out a coupon or even mention that the table was reserved through Savored is completely eliminated. McKean said restaurants like it because other patrons don’t know that some tables are receiving a discount, and patrons like that they don’t have to fuss with print-outs or disclose to their eating partners that they aren’t paying full price.

Since Savored.com is making only $10 from each transaction, its model is less profitable than the traditional daily deal. But McKean is okay with that because he believes he is building a much more sustainable business (plus, the company has raised only $4 million in venture capital.).

“We launched our current model seven months ago, in September of last year, and we are on track to help restaurants drive $25 million in sales this year,” he said. “The fact that 90 percent of restaurants have never done work with the deal sites means we are succeeding.”

Next up for the company is vertical expansion this year to new areas, such as spas and travel.