Visa’s Square Holdings Quantified

Perhaps it could be a case of hedging some bets.

As disclosed in a regulatory filing on Thursday (Feb. 11) with the Securities and Exchange Commission, Visa holds just under 10 percent — actually 9.99 percent — of payments tech firm Square.

That would bring the global payments giant to the level of one of Square’s top five holders, a relatively new perch as Visa was not listed as among the biggest holders as recently as the IPO process that took shape last year. Such status would also mean that Visa has boosted its stake fairly recently. The initial investment started back in 2011, but the amount of shares and the ownership stake were not disclosed back then.

The news of the holdings cheered investors, who sent the stock up roughly 6.8 percent in aftermarket action on Thursday evening, as Reuters noted. That takes the shares in the FinTech outfit up from nadirs, as Square lost 35 percent of its values since going public in November.

Could it be, though, that the two firms are frenemies? Consider the fact that Visa has a card-reading offering in the market known as Visa payWave. By holding a significant amount of Square shares, Visa gets to ride both horses in the race, with the ability to peer over a fellow (and perhaps nimbler) payment innovator’s shoulder.

For now, with a backer like Visa, Square gets a vote of confidence that moves beyond executive headlines, tied, as ever, to Jack Dorsey. The eventuality is that Square will be judged on the merits of its products and potential, and here, Visa seems to be saying that it sees a bit of promise in both. The company is going to report its first-ever public results in March, so that earnings announcement may be watched with interest up and down Wall Street — but also in the backrooms and boardrooms of Visa itself.

Originally published at www.pymnts.com on February 12, 2016.