Twitter co-founder Jack Dorsey wants to change how we all think about payments, and Europe is on his radar.
On nearly every shop counter around the world, there’s a till that’s hardly changed in two or three decades. Usually grey, always ugly, these machines clutter the single point that every customer is guaranteed to see when they go to buy something. Little wonder that luxury brands from Hermes to Burberry would rather take your credit card away, deal with the dirty business of payment and then bring back a bill neatly encased in a leather wallet for customers to sign.
Jack Dorsey doesn’t think things have to be this way. Not content with co-founding micro-blogging site Twitter, this superstar of Silicon Valley now wants to change how the world pays for things. With his own worth now estimated at $1.1billion, he should know a thing or two about money.
The vehicle for that transformation is a company called Square: it’s built its burgeoning reputation on a small, square credit card reader that plugs in to the headphone jack of an iPhone and lets any user take credit card payments via a simple app. Once you’ve used a card once and registered it, receipts are emailed automatically.
After taking off in California, it’s allowed thousands of merchants, from taxi drivers to businesses big and small, to take card payments where previously it was impossible because of high charges and embedded vested interests. And they’re also, in America, already working with Burberry.
The argument runs that Square makes the transaction more efficient, cheaper for the seller, and more convenient for the buyer thanks to emailed receipts and a quicker process. This week, Square announced its first market outside North America, and after that Japanese expansion it hopes to launch services in many more countries.
Dorsey confirms: “We want to bring Square to the world,” and indicates for the first time that the firm is planning a rapid international expansion.
“We’ve driven a lot of growth in the United States, but we’re really excited to get outside the United States,” he says. “You’ll see some announcements very soon.”
Dorsey remains chairman of Twitter, which is widely thought to be focusing on increasing its own profitability with a view to a stock market flotation in the fairly near future. But with Twitter established as a global force, used by more than 500million people and a permanent fixture in worldwide communications, it is Square that is increasingly likely to attract the attention of a major-sized audience too.
Last week the company announced a surprising new direction, however: with a housing unit for an iPad, called Square Stand, it moved toward competing directly with those decrepit cash registers, aiming for what Dorsey calls “medium-size, high-volume businesses with a line out of the door”. The company that was long tipped as aiming to replace tills, cash and even eventually credit cards themselves seemed to begin to embrace what some hoped was the past. The stand can easily plug in to a cash drawer and a printer, although its sleek, minimalist looks mean they’re likely to at least be under the counter.
Dorsey himself is clear on what Square can do, and what it can’t: “It’s not about killing cash,” he says. “It’s about being able to account for your entire business.” The stand’s main feature is its built-in card reader and while in Britain contactless card payments are growing rapidly, in the US this combination of ease of use and elegant design is proving popular. That’s not just for a number of aesthetic and timesaving reasons, but also because significantly more data is made available through a system such as Square. And Dorsey uses an example close to home to demonstrate what he means.
“My mother owns a coffee shop,” he says. “Some basic analytics meant she realised opening an extra hour meant they could increase revenue by 20 per cent.” Dorsey claims with rival systems, that kind of data-based insight would have been almost impossible for any small business to garner, and he’s certainly right that the kind of kit required would have been expensive. “With old technology, people come by to set it up, you’re in to $10,000 service contracts. With our Stand we wanted to make all that stuff simple and affordable.”
It does not sound like a revolution, and in some ways it is indeed simply Square moving from hot young start-up to maturing business. Last year Dorsey signed a deal with Starbucks that sees the coffee giant using his service across America.
“The way to think about the simple card reader was that we wanted to let individuals take credit card payments, whether that’s roaming personal trainers or golf instructors, and then with the partnership with Starbucks we took the product to a much bigger level. Now we’re looking at really high volume, big service restaurants, those folks that have lines out the door and also even more brick and mortar places. With the stand we’re showing that Square can really grow with your business.”
What Square offers, Dorsey claims, is a mixture of doing something new and something more prosaic – simply getting paid. “We’re in the business of breaking down the barriers and making things more convenient,” he says.
The future, however, is marked not solely by becoming another service, albeit a neatly designed one. For all the talk about Square making things fit the ‘Apple aesthetic’, Dorsey is unimpressed by the focus on that superficial aspect of Square. “Design is not just about how it looks, it’s about how it works,” he says. “The technology should disappear when you’re just using it. Any technology can be made to look good.”
He says that Square used iPhones and iPads because they were so simple – “a two-year-old could teach you how to use it” – and because they could easily look “timeless”.
“But we focus more on the experience than design so it’s something that’s intuitive and people can pick it up before it goes ahead,” says Dorsey.
Of much more importance, and increasingly so in the future, is a renewed focus on the analytics that Square offers simply by automatically recording everything that happens and making it easily available. That translates into both a simple analysis of cashflow and an instant snapshot of what is being sold when.
Further down the line, however, the bother of getting a credit card out at all could yet be eliminated. The “Square Wallet” is a product that Dorsey himself admits “right now is ahead of its time”, and is itself limited by the number of people who have signed up for Square overall. But the idea is a simple one: anyone who has linked their credit card to their account can simply identify themselves to a merchant, and use their presence in a shop to verify that they want to make a purchase. Simply, put a user tells a shop assistant who they are, and the system brings up an image of their face that allows the store to verify they are who they say they are. Again, Burberry is already using the service in America.
“It’s a big part of our future,” says Dorsey. “I want to be able to walk into a restaurant, have a great conversation, a great meal and get up and walk way when I’m ready. For a number of people that have house accounts that world already exists, and it allows the restaurant or me to focus on what’s most relevant – more tables or having a better time. We can make all the inconvenient stuff around that disappear. People get to choose where they spend their time.”
For now, however, Square must be content to realise that people are not yet ready for that level of trust: “We have some education to do,” agrees Dorsey. “Any new payments system people have to get used to, but with this I can walk around without my wallet. I never have to bring it from my house. And the more and more we can have digital presence in the cloud the better, because we need it for security if I lose my wallet, for instance.”
The expansion into Japan is just a first step for a business that Dorsey says will become “a global company”. It’s already looking to new territories.
“We need to find a great partner bank, establish the maturity of credit card systems in new markets,” he claims. “But we’re finding more and more that what we do is universal – we have the ability to build one product for the world, although we do need to tailor it for the market.”
Square’s rapid growth in Canada and the USA means, as Dorsey puts it, “the credibility’s getting a lot better” when he approaches those potential new partners. He says that opens up new possibilities for more rapid growth. And if the man who co-founded Twitter knows about one thing more than any other, it’s rapid growth.