Square is generating incremental revenue for Visa. Visa can now earn a 1% fee from my purchases at the local farmer's market. Prior to Square, that simply wasn't possible. Visa wants to endorse the business model, but rather than just saying "we support this", they instead give Square a $1 "strategic investment". That is their endorsement, and they hope it helps Square grow faster. The faster Square grows, the sooner Visa gets it's 1% from transactions that have historically been cash only.
I don't really understand how this can be viewed as a mistake by either party. Sure, it pisses off Intuit and other Square competitors, but Visa has a monopoly, and doesn't have to give a shit. Visa's growth opportunity is replacing existing cash transactions, and their risk is financial regulations that cram down interchange fees. The business strategy for Visa should be endorsing Square for growth, and hiring the best lobbyists to keep prices high.
I don't really understand how this can be viewed as a mistake by either party. Sure, it pisses off Intuit and other Square competitors, but Visa has a monopoly, and doesn't have to give a shit. Visa's growth opportunity is replacing existing cash transactions, and their risk is financial regulations that cram down interchange fees. The business strategy for Visa should be endorsing Square for growth, and hiring the best lobbyists to keep prices high.