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Square doubles userbase to 2M, transactions grow to $6B per year

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More than 2 million businesses and individuals are now accepting credit and debit cards via the Square mobile transaction platform, up from 1 million just six months earlier.

Square added that users are now processing more than $6 billion in payments on an annualized basis. In April, the startup reported annual transaction rates of $5 billion.

Square enables small businesses and other users to accept credit and debit purchases by swiping cards through its signature card reader, a small dongle that plugs into their smartphone's audio jack. The dongle is for sale at roughly 20,000 U.S. retail locations including Apple (NASDAQ:AAPL), Best Buy, OfficeMax, Radio Shack, Target and Walmart stores. The reader retails for $9.95; new users receive a $10 rebate upon signup.

Square charges a flat fee of 2.75 percent on all transactions and promises users no contracts, monthly fees or hidden costs. The firm promises merchants access to their funds by the next business day.

Recent reports indicate Square is raising a new round of financing that values the company at $4 billion--roughly four times what it was worth a year ago. Square has raised about $137 million from investors including Kleiner Perkins as well as Tiger Global Management, Sequoia Capital and Khosla Ventures. During its last round, completed in June 2011, Square raked in $100 million, vaulting the firm's valuation to more than $1 billion. Earlier this week, Square appointed Sarah Friar as chief financial officer; Friar previously served as senior vice president of finance and strategy with enterprise cloud computing firm salesforce.com.

Square faces competition from a host of rivals including PayPal Here, which enables small businesses and other users to process transactions by swiping cards through its own, triangle-shaped dongle. PayPal Here went live this past March, and more than 200,000 merchants signed up for the service within its first month of availability.

Some observers believe Square could also face a significant challenge from Apple, which this week unveiled its iOS 6 operating system update, coming to consumers this fall. iOS 6 includes Passbook, a new app that stores and updates boarding passes, retailer loyalty cards, movie ticket apps and related consumer information and documents. Some analysts believe Square, PayPal Here and other mobile transaction platforms could suffer if and when Apple chooses to incorporate payment functionality into the Passbook service.

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