Bloomberg News has reported that the payments startup Square Inc. has authorized a tender offer of 1 million shares at $135.28 per share. That would value the closely held company at $5 billion, the outlet said, citing unnamed sources with knowledge of the matter.

Rizvi Traverse Management LLC and other investors want to buy the privately held stock from employees and early shareholders, sources told Bloomberg. Square was valued at $3.25 million in August 2012.

Since it joined the payments scene in 2009 with its tiny credit card-processing dongle targeted at small merchants and independent contractors, Square has moved into retail outlets.

It rolled out Square Register, which lets merchants replace cash registers with payment machines using iPads. And it drew a $25 million investment from Starbucks Corp. in 2012, with the coffee chain using Square services in 7,000 of its stores, according to Bloomberg.

In May, Square said it is processing $15 billion annually, excluding Starbucks. Square co-founder Jack Dorsey, who also helped start Twitter, said during a keynote speech at this week's National Retail Federation Big Show that Square merchants are drawing more than 1 billion visits annually, also excluding Starbucks.

Sources told Bloomberg the tender offer for Square's shares is available to holders of common equity in the startup. Square, which has received funding from Kleiner Perkins Caufield & Byers, Sequoia Capital and Khosla Ventures, has 36 million to 37 million shares outstanding, another person told Bloomberg.

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