Square Market has announced that they will start accepting Bitcoin payments effective today. The capability is facilitated by Coinbase. (Just to be sure, TechCrunch has done us the favor of confirming with Square that this is not an April Fool’s joke.)
Square Market is an online storefront that allows merchants to post merchandise for sale and provides full payment processing functionality, similar to eBay or Amazon. It is one of several services provided by Square.
As is the case with other Coinbase integrations, buyers pay with bitcoins and the seller receives the full amount posted in, for example, USD. Coinbase does the exchange work in between and facilitates the transfer of funds. Neither buyers nor sellers are charged additional fees by Square for payments made via Bitcoin, although sellers will still be charged the standard 2.75% fee for each sale.
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As Coinbase does charge a fee for processing bitcoin transactions, albeit likely discounted for a player of Square’s size, it would mean that Square must somehow compensate for this expense, which it is not passing on to its consumers. The hope is that sales volume will increase now that customers have this new payment channel and perhaps indirectly benefit its other services, thus more than offsetting Coinbase’s cut. Their prominent and rising stand in the payments world may provide enough momentum to make this happen.
In addition to launching its Square Market in 2013, Square is best known for its Square Reader and Register payment processing solutions which allow physical merchants to accept credit card purchases from a mobile device or iPad. The current bitcoin integration isn’t applicable to Square’s offline products or merchant solutions, only to its online Square Market where it operates the payment processing for its web based sellers. However, as merchants aren’t exposed to bitcoin price risk due to products being priced in dollars, it can be expected that Square will evaluate the online demand and decide whether to add bitcoin payment features for its Square reader in the future.
Square was founded by Twitter founder Jack Dorsey. It is estimated to be valued at $5 billion as talk of an IPO has been going for several months.