Why is Visa interested in mobile payment company Square?

Mega credit card company Visa appears to be incredibly impressed with mobile electronic payment startup Square, according to a company blog post.

The post titled “Emerging Payment Types = New Opportunities” starts by spotlighting a recent interview by All Things Digital with Square founder Jack Dorsey and continues by graciously praising the company’s vision as a “big deal.”

Square, founded in 2009, has created a small device which attaches to a mobile device to allow the user to accept credit card payments. Currently, the device can be plugged into a smartphone that uses Apple iOS and Google Android, including the iPad. Getting started seems pretty easy as users are instructed to download the Square app, plug-in the special credit card device to the headphone jack, input the purchase amount, the consumer signs with their finger and that’s it.

So why is Visa stroking the startup’s ego? There could be a couple of reasons. First, Visa may be starting to understand that businesses are continuing to tailor to the mobile consumer. If you want to sell to the mobile consumer, you may have to be mobile. Second, the blog was written by Visa Corporate Relations and might be looking to strike a partnership. Though interestingly, Square is using a Visa card in its demo image (see image above). Enabling purchases to be versatile and available anywhere could greatly increase Visa’s attractiveness to both businesses and consumers.

Lastly, perhaps Visa is looking to get on Square’s radar for an acquisition. A piece of technology like Square’s, along with its millions of dollars in transactions every week as well as signing up 30,000 to 50,000 new merchants a month, could put Visa ahead of the competition. However, competition for these devices is thick, including an iPhone system from well-known payment company VeriFone, as well as potential patent issues, which Square faced even before it officially launched.

Regardless of the reasons for the post, it’s a good sign that Square is making headway with entrenched financial institutions, which is going to be one of the keys to truly mass adoption. With offices in both San Francisco and New York City, the company most recently secured $27.5 million in funding led by Sequoia Capital.