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UPDATE 1-Dorsey-led Square posts smaller-than-expected qtrly loss

(Corrects paragraph 9 to remove reference to adjusted loss of 5 cents)

May 3 (Reuters) - Square Inc, the payments company co-founded by Twitter Inc Chief Executive Jack Dorsey, reported a smaller-than-expected quarterly loss on Wednesday, as customers processed more transactions through its network and costs fell.

The company's gross payment volume - the total dollar amount of all card payments processed by sellers - jumped 33 percent to $13.65 billion.

The San Francisco-based company's shares were up 5 percent at $19.14 in after-hours trading.

Square facilitates payments between businesses and customers by using a credit card reader that turns any cellphone into a payment terminal.

The company, which started as a pure payment processor, is also expanding into new areas, offering a host of services that include lending unit Square Capital, food ordering service Caviar and peer-to-peer payment service Square Cash.

Square also made its foray in the UK by launching its services in March. Outside the United States, it operates in Canada, Japan and Australia.

Square also raised its 2017 total revenue forecast to $2.12 billion-$2.16 billion from $2.09 billion-$2.15 billion.

The company said net loss narrowed to $15.1 million, or 4 cents per share, in the first quarter ended March 31, from $96.8 million, or 29 cents per share, a year earlier. (http://bit.ly/2pIUjea)

Analysts, on an average, expected a loss of 8 cents per share, according to Thomson Reuters I/B/E/S.

Operating expenses fell about 10 percent to $187.51 million.

Net revenue jumped 21.7 percent to $461.55 million, beating estimates of $450.7 million.

Shares of Square, which went public in November 2015, had risen 34 percent this year through Wednesday's close. (Reporting by Sruthi Shankar in Bengaluru; Editing by Sai Sachin Ravikumar and Martina D'Couto)