Was this a really bad week for Square?

Square’s announcement that it had partnered with Intuit to share data between its points of sale and Quickbooks accounting systems was surprising because Intuit has its own competing dongle, and the companies compete for small business clients. Further, it seems likely that Square merchants will have to pay to access Intuit’s features.

The move signals that Square has recognized Quickbooks’ deep hold on small to medium businesses, according to Brian Roemmele of Quora. In other words, it’s a bit of a surrender.

Not long after this announcement, PayPal announced it was acquiring Braintree for $800 million, picking up talented people and bleeding edge mobile technology in the process.

Square was also named as a potential suitor to Braintree. So how does PayPal’s acquisition affect it?

“Braintree is not nearly as complementary to Square as to PayPal,” said Rick Oglesby, senior analyst with Aite Group. “I don’t think this news changes their urgency to move at all. They’re growing without too much concern. PayPal, as part of a publicly traded company (EBAY), is under pressure to grow. Square has more flexibility It has no Street analysts to answer to.”

Square’s focus is offline, Oglesby said, but of course, PayPal is making inroads in brick and mortar too. Square offers its Markeplace as an online value-add for customers, and works to bring in business to its customers in this area.

“One of the advantages Square has is that they control all their own technology,” Oglesby said. “Square is an integrated provider while PayPal is an open network solution.”

And yet, for Square it’s not about the device or the payment processing itself, it’s about growing the customer base, according to Oglesby. Square has about 2 million customers at last counting, and processes $15 billion in payments a year. Braintree had 40 million users, and expected to process $12 billion in 2013.

Square’s deal with Intuit also meant that Square untypically opened an API to a major partner. This may signal a move to a more platform-based approach. (Hello, Stripe.)

Cherian Abraham, mobile payments & banking advisor at Experian, has spoken up about a Square-branded card as a way to drive revenue. “A platform play coupled with bank card partnerships can help Square drive more profitable transactions over existing rails – while allowing the payments to vanish from the merchant – consumer interaction as they love to do. We should also see more of the line-busting scenarios enabled for mid-level Square merchants.”

In other words, Square will continue to delight the customer by controlling as much of the game as it can, in a manner reminiscent of Apple.

Time will tell — and Square has time. So maybe things aren’t so dim for Square after. Have you seen the new digs they’re moving into next week?