NEW YORK (AP) - Shares in the mobile payment services company Square rose sharply Friday after Visa disclosed the details of its ownership stake in the company.
While Visa's stake amounts to about 1 percent of the company, and the stake was established at least five years ago, investors interpreted the announcement as a major endorsement of Square by Visa, the world's largest payment processing company.
According to a regulatory filing, Visa owns 4.2 million of Square's Class B shares. While Class B shares are not traded publicly they could be converted to 3.5 million Class A shares, which would leave the Visa with 10 percent of that class of shares. That conversion would amount to just 1 percent of Square's total outstanding shares.
The disclosure, known by its regulatory filing name 13G, is how major investors disclose an existing stake in a company. Because Square only went public three months ago, this is the first time the public is getting details about Visa's ownership. Visa announced an investment in Square in 2011 but at the time did not disclose the terms of that transaction. Other companies have disclosed similar details about their existing ownerships of Square, including JPMorgan Chase.
Visa has been working on payment services technology of its own including Visa payWave, which allows users to pass a card over a terminal to record a payment.
Square Inc., co-founded and run by Twitter Chief Executive Jack Dorsey, went public in November. The Square device facilitates credit card transactions by plugging into smartphones or tablets, allowing credit cards to be accepted almost anywhere.
Square shares were up 8 percent in afternoon trading.