Payments startup Square isn’t a year old but already has a valuation of $1.6 billion in its latest funding round.

Is this sensible?

Square is processing $4 million/day of payments and growing fast- it’s doubling every quarter. If it continues at this rate, by end end of the year in just six months it will be processing $16 million/day.

When Paypal was acquired by eBay in 2002 for $1.5 billion, it was also fast growing and processing…$16 million/day.

Paypal of course continued its massive growth and almost 10 years later is considered responsible for the bulk of eBay’s $37 billion valuation.

Square’s valuation seen in this light doesn’t seem so outrageous.