Jack Dorsey’s Square is trying to graduate from cool party trick to global game changer. So far, the mobile payments service is far from the mark but it’s making progress. Since its launch, Square has delivered roughly 50,000 devices, according to Dorsey. The founder of Twitter has been a diligent ambassador, traveling to several parties and conferences this year (like last week’s TechCrunch Disrupt) to demo Square and answer questions on security, usability and how the tiny device will make money. Dorsey may seem like the patient salesman but he has serious ambitions for Square that include global domination.
In its current form, Square caters to a limited market. For the uninitiated, Square turns your mobile device into a credit card scanner, using a reader that fits into your audio jack and Square software. The device and the software are free, but Square takes a small percentage of each transaction (2.75% plus 15 cents for swiped transactions). As of today, the program only works on the iPhone, iPod touch, iPad, Nexus One and Droid, but it will reach other mobile devices soon. Although anyone can use Square, its largest demographic is expected to be small US merchants, who need to find a low cost solution for credit card transactions. That slice of America represents a huge opportunity, according to Dorsey, he estimates there are roughly 30 million US merchants who make less than $100,000 per year, of this group only 6 million are currently processing credit cards— the remainder, or 24 million, are all potential Square customers.
Despite all the potential, the future of Square is uncertain, given the fiercely competitive world of mobile payments. Beyond the bevy of mobile payment providers who indirectly compete with Square, its closest rivals VeriFone and Mophie have showcased their own card readers in the past year. That doesn’t seem to faze Dorsey who is trying to position Square as a global mobile payments provider that will offer a wide variety of solutions, beyond its iconic Square reader:
“The next obvious move for us is Canada. But it really has to be tailored to the culture. Different cultures use different technologies for payments. Japan for instance is using all NFC, Near Field Communication Technologies, all over Africa you’re seeing a lot of SMS usage for mobile banking and mobile payments. Our desire for Square is to be completely payment device agnostic and network agnostic and really work with whatever the culture is using predominantly. Here in the US its plastic cards, as we start going to other markets, like Europe, and to India and to Asia, we’ll be taking on more and more different technologies.”
If Dorsey has his way, Square could be huge, or rather, the Twitter of mobile payments. As he explains above, he wants to create a new set of technologies that will allow Square to design tailored solutions for several foreign markets. A credit card reader is only a fraction of the picture. In our video interview, Dorsey did not give a time line for his grand ambitions, but in the near term, he’s focused on accelerating Square’s US adoption. He says it’s vital for the business to reach a critical mass in payers within the next six months. Can Dorsey’s Square conquer America and then take on Canada, Europe, Asia? It’s a tall order, but I wouldn’t bet against the man behind Twitter. See our full video interview with Dorsey above.