The round was led by Sequoia Capital and firm partner Roelof Botha will join the board, according to The Wall Street Journal.
Square, which launched publicly at the end of October 2010, develops hardware and software designed to turn iOS and Android devices into payment processing machines. As many as 50,000 businesses have signed up for the service in the past three months, according to COO Keith Rabois.
The startup competes against Visa, Intuit, PayPal and soon even Google in the increasingly crowded mobile payments space.
The huge cash infusion will help Square hire new team members, grow more aggressively and raise awareness around its service. "We want to accelerate word of mouth and make sure we have enough systems in place," founder Jack Dorsey told The Wall Street Journal on news of the funding.