Square is seeking a buyer, according to multiple reports, but the company's official statement indicates otherwise.
Square has reportedly had serious discussions with Google to take over the mobile payments startup, The Wall Street Journal reported April 20, citing anonymous sources. TechCrunch similarly reports that Square is shopping itself around to major tech companies, but says any talks with Google were brief and insubstantial.
"We are not, nor have we ever been in acquisition talks with Google, and while we appreciate that Square may be an attractive target for some companies, we have never seriously considered selling to anyone or been in any talks to do so," Square said in an emailed statement.
Google will not comment on rumor or speculation, spokesperson Tim Drinan stated via e-mail.
Any mention of a potential acquisition of Square carries more weight in the wake of Square delaying its initial public offering in late February. That delay fueled thoughts that the company's future financial performance would not sustain long-term growth.
Square, a supplier of mobile card readers and point of sale software, lost $100 million last year, the Journal says.
"There is definitely something going on," says Richard Crone, chief executive of San Carlos, Calif.-based payments consulting firm Crone Consulting LLC. "I expect to see something happen with Square in the next four to six weeks."
Square is likely seeking a buyer because it has not been able to develop meaningful scale, Crone says.
"Generally, you get scale by seeking massive amounts of volume from a few very large sources," Crone adds. "The way Square radically de-centralized when casting its net to small micro merchants, it is hard to bring profitability."
Square likely has a significant number of accounts that are "using the card reader on a catch-as-catch-can basis, and there isn't much Square can do to encourage them to use the reader more often," he says.
James Wester, research director for global payments at IDC Financial Insights, agrees that Square's formula makes it difficult to post profits.
"The big question for me with Square is whether or not there's a point where incremental transactions processed become profitable or if growth, or adding volume, just digs the hole deeper," Wester says.
While Square clearly has to win the business of larger merchants, it might be difficult because it would enter a competitive market with entrenched players, Wester says. "At some point you have to wonder if potential buyers don't look at the math and wonder if there's anything to acquire," he adds.