Square CEO Jack Dorsey not worried about Apple Pay
Square CEO Jack Dorsey says Apple's newly-announced mobile payment system, Apple Pay, is not a threat because his company's product is fundamentally different.
"It's not a threat because ... we don't build a credit card, we don't build a payment device at all," said Dorsey at the opening of Square's new Canadian office in Kitchener, Ont. on Wednesday.
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"They're building something that allows a credit card to be used in another place, but they're not building a terminal. We are a terminal, we a register and we accept payments, so there's no threat, there's no competition there at all," said Dorsey.
Apple Pay users will register a card on their smartphone and then hold the phone close to a payment terminal using near-field communication (NFC) technology to make a payment. The service will be available for U.S. customers starting in October, where retailers like Nike, Whole Foods and McDonalds have signed on. It's not yet clear when it might be available in Canada.
"NFC is not new technology," says Dorsey. "It really hasn't taken off because there hasn't a huge consumer demand for it. We think Apple may change that."
Square has what it calls the Square register, which includes an app for iOS and Android and a card reader. Unlike Apple Pay, users swipe their credit cards at terminals installed by retailers on mobile devices.
Square charges retailers 2.75 per cent of the value of purchase for every card swipe, and promises the payment will be deposited in two business days. Currently in Canada the interchange fees charged to merchants for credit card transactions are between 1 per cent and 4 per cent per transaction, though the federal government is seeking to lower those fees.
However Dorsey seemed open to making Apple Pay work with Square systems.
"We're building a register so that sellers can accept a credit card, so they can accept cash, so they can accept a cheque, so they can accept Bitcoin and so they can accept any form of payment that comes across the counter including future ones and burgeoning ones like Apple Pay," said Dorsey.
Interestingly, Apple Pay will be available at Whole Foods locations across the U.S., where Square already has registers set up. Square also has partnerships with the chocolate company Godiva, and clothing companies Uniqlo and Burberry in the United States use Square.
Square Wallet app is now Square Order
However, Square did have a mobile payments app called Square Wallet that the company pulled from app stores in May.
"We don't believe that's enough utility, we don't believe that it's actually enough for people to do it again and again, we don't believe there's enough value in terms of speed or convenience over just swiping a card," said Dorsey of the Wallet app.
Instead, the company launched Square Order, which is currently only available in the U.S.
"It not only allows you to open a tab remotely, it allows you to place an order," explains Dorsey. Users of the app can pre-pay and pre-order food and when they show up at the coffee shop or sandwich place, it's all ready to go.