Visa now owns a big chunk of Square shares, even though it has a competing product

Visa is now a major shareholder of Square, owning 9.99% of the payments company, according to a regulatory filing on Thursday.

Given Visa wasn't listed as one of Square's major shareholders in the S1 filed last year, it seems like it significantly increased its ownership after Square went public in November. Visa had made a strategic investment in Square back in 2011, but it never disclosed the exact amount of the deal.

In any case, it's a huge stamp of approval for Square to get Visa's endorsement. Square shares went up more than 6.75% in after hours following the filing.

Visa has its own credit card reading product called Visa payWave, but its brand recognition is likely lagging behind that of Square's. The investment will let Visa keep tabs on a growing company that could potentially disrupt its space, while also potentially giving it access to innovations going on within the company.

Square has lost nearly 35% of its value since going public in November. Once valued at $6 billion in the private market, Square now trades at a market cap of around $2.9 billion.

Square CEO Jack Dorsey is also the CEO of Twitter, but neither company has done particularly well in the public markets. Twitter shares were down more than 4% Thursday following weak earnings the day before. Square is expected to report its first-ever earnings in early March.