Mobile Payments Startup Square Is Weighing Lots of Options

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Popular mobile payments startup Square is reportedly fielding offers from both Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) while trying to decide if allowing itself to be acquired is the next step the company is looking for.

Square is frequently used by small businesses as a way to accept credit card payments using mobile devices. It is especially popular in combination with an iPhone or an iPad, and Apple sells the card swipe attachments in its retail stores. Square makes money by taking a 2.75 percent cut out of all the transactions made using the service. If you’ve ever signed for a purchase using your finger on an iPad and received your receipt via text message, then you’ve made a purchase using Square.

According to a report from Re/code citing various unnamed sources, Square is not actively trying to sell itself, though it would be interested in an offer of $8 billion or more. Both Apple and Google have considered purchasing Square in the last year, but Apple in particular seems to have lost interest. Apple has yet to make a billion-dollar acquisition and won’t benefit from a Square acquisition too much, although the deal would help it gain hardware customers among merchants that use Square. Google would be more likely to pony up that much cash and is more interested in gaining data on consumer shopping habits than Apple is.

Square was founded by tech entrepreneur Jack Dorsey, who is also the CEO of Twitter (NYSE:TWTR). Re/code’s sources said that Dorsey would be reluctant to sell to Google, since previous talks he had with the tech giant about a possible acquisition of Twitter left him feeling unhappy with the company and because Square’s aesthetic ideals more closely align with Apple’s vision.

Apple is interested in becoming more involved with consumers’ shopping habits but is focusing on engaging with consumers more so than merchants. Its efforts with the Passbook app and iBeacon technology reflect Apple’s growing interest in retail both online and in-store.

According to Apple Insider, CEO Tim Cook has said that Apple is interested in engaging with mobile payments more, especially since the fingerprint scanner on the iPhone 5S could be used to quickly make such transactions securely. “You can tell by looking at the demographics of our customers, and the amount of commerce that goes through iOS devices versus the competition, that it’s a big opportunity on the platform,” Cook said in January. Combining Touch ID with Square could allow customers to make a purchase at a brick-and-mortar store with the touch of a finger.

If Square is reluctant enough to sell to Google — and Re/code quotes one source as saying “Jack does not want to sell to Google” — then Apple could swoop in and pay a lower price. Of course, Square could always decide to go it alone and file for an initial public offering instead, though Re/code reports that would be unlikely this year.

Follow Jacqueline on Twitter @Jacqui_WSCS