Dan Frommer updated his chart after Square revealed it is processing payments at a $5 billion annualized rate.

It is exciting to see this kind of curb and Square is exciting to watch overall. However, Dan made a comment I found interesting:

Assuming Square’s published 2.75% commission, Square’s gross revenue run rate on $5 billion of annual payments is about $140 million. Square does make a margin from its commission, COO Keith Rabois told me last month. But the company is far from profitable — on purpose, of course. Much of the commission goes to pay the credit card companies, which Square won’t be able to design out of the picture for a while. And with a staff of ~250, aiming to double to 500 this year, Square is spending tens of millions per year on employees.

Payment systems are so locked by big companies (Visa, Mastercard) that to actually make a difference you have to come in and accept to lose money.

Hopefully, it won’t last long.