Square raised $27.5 million in funding in January, so it's not likely strapped for cash. But more valuable than the undisclosed amount of funding from Visa is the stamp of approval that comes with it.
Square offers small businesses a free alternative to expensive credit card terminals and asks for 2.75% of each purchase in exchange. About $66 million worth of transactions have been made using the device since it launched publicly in October, and that number is likely to increase as Apple introduces the devices in its stores.
At first, however, convincing small businesses that their transactions were safe with a startup was a hurdle. As thousands of them signed on, the challenge wasn't made any easier by an open letter from competitor electric payment processor VeriFone that accused Square of having a security flaw. Visa's investment shows confidence in both the startup and its security.