From that, its take is about $275 million a year in fees. It splits those fees with Visa, MasterCard, and the banks, but we think it's actually making a healthy gross margin, because it actually handles bigger transactions on average than most people plug into their estimates.
Also, that number actually understates how much business Square is doing.
It does not include the credit- and debit-card processing at Starbucks stores that Square said it would take over when the companies announced a partnership in August, a Square spokesperson told Business Insider.
At the time, we estimated that the Starbucks deal would add about $6 billion a year to Square's payments volume. Since then, though, Square's own payment-processing business, which mostly serves small businesses, has grown considerably.
Starbucks has said it will save money on payment-processing fees by switching to Square. We don't think that's the main point of the partnership, anyway—the Starbucks business mostly helps Square by expanding the places where consumers can use its app to pay.
More From Business Insider