Almost a year after setting up a UK business entity called Squareup Europe, today the payments company Square is officially opening up for business in the UK, marking its first move into Europe and its fifth country after Canada, Japan, Australia and its home market in the US.
The news was announced this morning at an event in London with Square’s CEO Jack Dorsey (who is also the CEO of Twitter).
“We founded Square to empower small businesses with tools to accept all forms of payments and to make a sale anytime, anywhere” he said. “We look forward to working alongside the millions of entrepreneurs and thriving independent, small and medium-sized businesses across the UK, especially those who do not yet take card payments.”
Square, which is publicly traded, will be looking to get some traction in the UK market first with a point-of-sale payments service targeting small and medium businesses (the news in fact was announced at an event at the Soho Piano Bar, one of Square’s first customers here): Square will sell a £39 Square Reader, a piece of hardware that connects by Bluetooth to your phone or tablet to turn that device into a payment card reader. And in addition to selling the reader, Square will take a 1.75 percent cut on all in-person transactions, and 2.5 percent for any sales made online, by phone or electronic invoice.
This is not Square’s first foray into business in the UK. Back in 2014, we spotted that the company’s point-of-sale software Register was quietly launched globally to allow people to take virtual payments, but this hasn’t been actively promoted as a business. In an interview, Sarah Harvey, who is heading up Square’s efforts in the UK, would not disclose how many businesses are using that currently in the UK, nor how much money it is processing here.
But a more formal entry into the UK is a long time coming.
Square, which was first launched in 2009, originally made its name by offering an easy way for small businesses to take card payments by creating a phone or tablet app that worked with a small piece of hardware, made and sold by Square, to transform those consumer devices into card readers and processors. Square marketed this specifically to those who didn’t take card payments previously and/or found buying traditional equipment and paying bank fees too expensive.
That is a service that had a ready market in the UK, too — where today there are an estimated 5.4 million small and medium businesses, and millions more sole traders, with a population of consumers that prefer to pay by cards: the average consumer carries only £25 pounds and 70% of all transactions are made with debit and credit cards.
So unsurprisingly, in the years between Square first launching its services in the US in 2009 and today, a number of other companies have sprouted up to sell similar services in the UK, including iZettle, PayPal, SumUp and more.
In other words, the market for stealing customers from existing, established companies is tight, and the number of businesses who take no card payments at all (late adopters) is smaller: it’s estimated that about half of the UK’s small enterprises do not accept card payments today.
Some believe that Square has, in fact, already missed the boat for making a splash in the market.
However, if you look at other businesses in the world of tech, it’s not always the first movers who are the winners (just look at Apple and the iPhone as one example).
What will be interesting to watch is not only whether Square manages to gain traction with its late entry into the UK market, but what else is chooses to bring here alongside the payments services.
Square in the U.S. has been moving beyond payments enabled by a mobile phone or tablet, into more specific industry services like food ordering and delivery; as well as cash advances, invoicing, API access for on-site integrations and other services for businesses.
In its last earnings, Square noted that “new products” launched since 2014 represented 25 percent of its adjusted revenues for the quarter. Harvey would not comment to me on when and if Square planned to introduce services like these in the UK, nor whether there were plans to expand to other markets in Europe.
Revenues at the company last quarter increased 35 percent, to $402 million in the quarter. Subscription and services-based revenues grew 81 percent, to $41 million in the same quarter. Hardware sales, which represent the smallest portion of its revenue mix, grew to $8.9 million as more vendors continue to upgrade to contactless and chip-card readers.
By: Ingrid Lunden (Tech Crunch).
Photo: Mirror UK.
Review: Emerging Market Formulations & Research Unit, Flagship Records.
For: Facebook