The Next Wave of Mobile Payment Launches in Canada

Twitter cofounder Jack Dorsey launches Square: a small, free plastic card-swipe reader that plugs into an iPhone, iPad or Android

Written by Ken MacQueen for Maclean’s

It’s a Wednesday, so Jack Dorsey is sipping tea in a 20th-floor lounge of Vancouver’s Fairmont Pacific Rim hotel, chatting with a Maclean’s reporter about the Canadian launch of Square Inc.—a mobile credit card reader and business management system—and the second revolutionary idea he has helped create in his 35 years. Canada is the first stop in Square’s global expansion.

“We want to carry every transaction in the world,” he’s said, never one to dream small. Wednesdays are reserved for marketing, communications and growth. As chairman and co-founder of Twitter, the ubiquitous 140-character micro-blogging site, and CEO and co-founder of Square, he’s learned to compartmentalize.

He tweets when the mood strikes. This morning he tweets the expansion of Square into Canada, creating within minutes a buzz in the Canadian contingent of the two-million-plus followers of @jack, his Twitter handle. He tweets photos of float planes landing on Burrard Inlet outside the hotel. He tweets the wrapper of the organic tea he’s sipping. Since Twitter came online in 2006, he’s fired off more than 12,000 random thoughts.

Dorsey is a believer in serendipity, of good things emerging at the right time. Which brings us to Square. It is a small, free (and yes, square-shaped) plastic card-swipe reader that plugs into an iPhone, iPad or Android. It allows registered sellers to accept Visa and Mastercard purchases, with a 2.75% fee per transaction. Two million individuals and merchants now use Square in the U.S. to record $8 billion in annual sales. “Anyone who’s selling anything, be it at a garage sale or a bake sale, or if you’re a piano teacher or a gardener, you can now accept credit cards,” says Dorsey.

He expects individuals and small retailers will be the early adopters in Canada, as in the U.S. There, it’s becoming so mainstream it facilitated credit card campaign donations for Barack Obama and Mitt Romney and is beginning to attract larger businesses. Starbucks added the Square payment system to 7,000 U.S. stores this fall, and bought a $25-million stake in the company.

Square’s free app gives retailers business tools to track sales, taxes, inventory and popular items; it can identify new customers and incentivize them to return with discounts or loyalty programs. The technology enables big businesses to offer more personalized service. U.S. shoppers can download a “wallet” application to their mobiles and link to their credit card. They can call up a list of participating merchants, and have their names and photos pop up on a store’s register when they enter. A clerk then charges selections to their name. “You don’t bring your phone out, you don’t bring your wallet out—it just works,” says Dorsey. It’s only “a matter of time” before that technology rolls out in Canada, too, he says—though it’s far from certain that average consumers need, want or will accept an abrupt change in deeply ingrained shopping habits.

Square enters a mobile payment field soon to be crowded with competitors. Smartphone makers, telecoms, banks, even search-engine giant Google are all eager for a piece of an increasingly cashless society. In May, the Canadian Imperial Bank of Commerce and Rogers Communications Inc., which owns Maclean’s, announced a joint venture to turn smartphones into physical CIBC credit cards, allowing small purchases to be made by tapping phones against terminals. The service is expected to launch before year’s end.

Forbes, which recently added Dorsey as a billionaire member of its famed list of the 400 wealthiest Americans, calls him “nerdier than Steve Jobs” and “a disrupter on an epic scale.” Forbes values his reported 3% stake in Twitter at $240 million and his 26.4% share of Square at $845 million. When one or both companies might go public is a source of speculation, especially in light of the overvalued Facebook IPO. “The only time we think about that is when reporters ask us,” Dorsey says of a public offering.

Certainly, he builds big dreams from small ideas: a tiny plastic dongle, or a blogging site designed so even those using the most primitive cellphones can tap out 140 characters and participate in the global conversation.

The best technologies, in his view, should virtually disappear—like electrical sockets in the wall, they’re means to greater ends. Gadgets and tweets are just tools for global discourse. “You have a deeper understanding for how people live, how they wake up, what they do with their day and how they go to sleep.” From that, he’d like to think, can come understanding and empathy and a reduction in conflict.

For Dorsey’s third act, he wants to craft technology that can foster greater engagement in how governments form and function, and how leaders are chosen. Asked how that would work, he offers a smile and a shrug. “It’s still kind of brewing,” he says. “I’ll get there eventually.”

This story originally appeared in Maclean’s.

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