Square, Twitter founder Jack Dorsey’s mobile payments start-up, may be worth $200 million in new funding round

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Jack Dorsey famously helped come up with the idea for Twitter.

Now the entrepreneur, who still serves as that hot Internet company’s chairman, is making a big splash with his next company, Square.

Tongues are wagging in Silicon Valley that the mobile payments company is raising a new, very large round of funding that would make the company worth $200 million, the kind of steep valuation that is sure to make those tongues wag even faster.

No one knows better than former PayPal executive and recent Square recruit Keith Rabois how difficult it is to build a payment company and gain traction in that competitive market. But Square, which turns smart phones into credit card machines, is processing millions of dollars a week in transactions. It is targeting small businesses, many of which don’t have a means to process credit cards. Square works on the iPhone, iPod Touch, iPad or on Android-powered phones.

It’s unclear if this is yet another bloated valuation amid a Silicon Valley bubble or smart investors getting in on the ground floor of a very promising new technology. Stay tuned.

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-- Jessica Guynn