Visa buys nearly 10 pct stake in Dorsey’s company, Square

Shares in the mobile payment services company Square rose sharply Friday after Visa disclosed the details of its ownership stake in the company.

The stock held gains even after Visa noted that some early reports on its regulatory filing were erroneous.

Visa Inc. (NYSE:V) has reportedly invested in Square Inc.in a bid to expand its presence in mobile space.

Square also has many more Class B shares though that are controlled by Dorsey and early backers like venture capital firms Khosla Venture and Sequoia Capital as well as co-founder James McKelvey.

Shares of Square spiked 14 percent before the opening bell Friday.

Shares of Square hit a high of $9.74 in morning trading in NY, before retreating to $9.40, up 9% on the day. The executive added that he has been in close “non-stop” collaboration with both companies’ management. The Square device facilitates credit card transactions by plugging into smartphones or tablets, allowing credit cards to be accepted nearly anywhere.

But the company faces intense competition in the payments market, with Apple Inc launching its Apple Pay service, Amazon.com Inc exploring in-store payments, and startups such as Stripe Inc entering the fray.

Visa already had an investment in Square.

It can convert over 3.52 million of them to shares of Class A stock, said the Square filing on Thursday. Once valued at $6 billion in the private market, Square now trades at a market cap of around $2.9 billion. As of the company’s closing price yester, Square stock prices are down over 30% since the start of the New Year. Today is the first time Square stock has been trading over $9 for roughly two weeks.