Corrected at 5pm Dec. 16
Square, the mobile payments company co-founded by Twitter alumnus Jack Dorsey, has been ramping up efforts in Canada. It has created two new roles designed to build both its client base and its brand among small business owners.
Square’s service and hardware allow business to use their mobile devices to swipe credit card payments. In the last three months, the company hired a new Canadian head of business development, Steve McPhee, and a Canadian communications director, Jenny He. He was previously commercial PR lead at Microsoft, and before that was a marketing analyst at AmEx. McPhee worked with startups eLuxe and Makeover Solutions, and before that was a brand manager at P&G.
Swati Mylavarapu, head of Square Canada, told Marketing that Square’s first year in Canada outpaced its first year in the U.S., and that since its Canadian launch in 2012 it’s signed on 200,000 clients. She pointed to Canada’s high smartphone penetration and sophistication in consumer finance as reasons for that success.
When Square was founded in 2009, it was an early comer to the mobile payments market. But now it’s facing increasing competition both from small dedicated players such as Shopify and nTrust, and from larger entrants like Paypal and Google. Apple, in particular, has gotten a lot of attention in recent months with the announcement of Apple Pay, an NFC-based mobile payments service integrated into iOS.
In response, Square has tightened its focus on its most common use case: small and medium-sized business. The solution’s core strengths are its simplicity, low cost, and low barriers to adoption – Square makes both its credit card reading hardware and mobile app free, so businesses and hobbyists too small to buy an expensive POS machine can convert their personal mobile devices into cash registers. Thus the little white Square device has become a staple at one-of-a-kind hobby shows and farmers’ markets across Canada.
Canada, like many international markets, is brimming with the kind of small businesses and independent contractors that Square seeks to reach. According to Industry Canada, 98% of all registered businesses in Canada are small (between 5 and 100 employees).
Mylavarapu said Square’s clients in Canada mainly fall into three categories: retail, professional services and contracting. Square Canada recently rolled out an instant invoicing feature for contractors, allowing them to take payments on-the-spot rather than waiting for mailed checks.
“We have businesses in Whitehorse that are selling with us. We have sellers signing up in really remote parts of the Maritime provinces,” she said.
Globally, Square has begun to expand its services beyond payments, offering customer management and analytics through the Square Register app. Vendors can look at reports on peak traffic periods, repeat customers and hot items – data that are typically only available to larger retailers with expensive tracking systems.
These new backend services put it in direct competition with Shopify, an app-based small business solution for retail analytics and managing store operations. But although Square’s offering is newer and less developed, it does have two strong advantages. Firstly, its penetration among North American small businesses may make it easier to pivot into more in-depth services and overcome the adoption barriers that innovators face when marketing to small businesses and professionals.
And second, it’s free to adopt. In Canada, Square’s core revenue comes from transaction fees,* and its analytics and backend services are currently being offered to all vendors without additional charges. In other markets, Square does charge fees for its backend services, but in Canada those services aren’t yet as developed. As more services roll out it’s likely that Square will introduce some additional fees for premium services — but since it already has a foot in the door with Canadian small businesses, finding clients won’t be as difficult.
*Correction: An earlier version of this article stated Square’s revenue comes entirely from transaction fees. This was incorrect; Square does charge for additional services outside of Canada.
