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Sir Richard Branson Reuters/Joshua Roberts

Mobile payments may soon replace the wallet very soon, and investors are pouring money into the biggest players in the space. One of the leaders, Square, recently joined the billion dollar valuation club after raising a $100 million funding round led by Kleiner Perkins Caufield and Byers. Now, the company has announced a mammoth new investor in Sir Richard Branson, the billionaire founder of the Virgin Group.

I'm very passionate about helping people start and grow successful businesses, and Square is an incredible technology that inspires and empowers everyone to be an entrepreneur, Branson said in a statement.

[Branson] took interest in Square's rapid growth and novel technology, in particular its free hardware that allows anyone to accept credit card payments anywhere, anytime, said Square in a statement.

Launched in 2010, Square is a mobile payments solution dreamt up by Twitter co-founder Jack Dorsey. Rather than building chips that utilize near-field communication (NFC) technology, Square sends each user a free dongle in the mail, which connects to any iPhone or iPad and allows anyone to accept any major credit card with a simple swipe. Inside the Square app, users can manage their payments and view their receipts, and merchants can also use Square to update pricing, automate checkout, and track payments, tabs and operating revenue.

We create the whole solution, said Kay Luo, a spokeswoman for Square. It's sort of analogous to Apple, where they create the hardware, the software, the operating systems, they create all of that. We create the hardware, we create the app software, we approve your account through Square, and the process is seamless.

On Nov. 2, Square released a new version of its iPhone application called Card Case, which uses location-based technologies to allow users to make payments even faster. With Card Case, customers can register their credit card information with any store using Square, and once the shopper is within 100 meters of the establishment, a geo-fence at that location automatically activates their tab so the customer never needs to open their wallet or take out their phone to pay for an item. Customers can simply say their name to pay, and receive push notifications for payment receipts.

We've removed the artifacts from the experience, so it's all about the interaction between the merchant and the customers, said Megan Quinn, Square's director of products.

Square has been the service of choice for many merchants and small businesses looking for a cheap way to accept credit cards while avoiding the extra processing fee. Those who register for a free account with Square receive the free app and a free dongle in the mail to swipe credit cards, and the lone cost of the service is a flat rate of 2.75 percent per transaction, which is simple enough for customers to remember.

Other services will have a transaction charge on top of [its rate], a 15 or 30 percent charge, and we've eliminated that charge, said Luo. There's no hidden fees and no fine print. With Square, you know you're always going to pay one rate whenever you're transacting.

Square processes over $2 billion in payments annually, and has signed up about 800,000 merchants to use its technology, and has signed retail deals with Apple, Radioshack, Best Buy, Target, and now Wal-Mart. Square also added Vinod Khosla, Larry Summers, and Kleiner Perkins partner Mark Meeker to its board this year. The company says it plans to introduce its mobile payments solutions to international markets in 2012.