Square, the producer of a tiny credit card reader, may soon get a massive cash infusion.

The mobile payments startup is reportedly set to raise $200 million, which would give the company an implied valuation of $3.25 billion, Dealbook's Evelyn Russli reported Tuesday, citing sources briefed on the deal. The financing is expected to come from Rizvi Traverse Management, a small private equity firm, sources told the reporter.

"The hefty investment -- the company’s third in less than two years -- will help the fledgling startup battle with the likes of Google, Intuit and PayPal. But it also puts enormous pressure on Square, led by Jack Dorsey, the co-founder and executive chairman of Twitter, to prove its worth," Russli said.

PayPal, for its part, recently launched its PayPal Here system, which, NYT's David Pogue noted, is nearly identical to Square's card reader.