Square Arrives in Canada
squareup.com
squareup.com
It's going to be difficult to gain traction for Square if they are offering businesses a solution that only provides half of what the competition does, even if it is cheaper.
Square has - unless they know something they aren't saying - massively misunderstood the reality of the marketplace in Canada. It is not the US with funny tax laws. In the realm of consumer banking/payment, we are light years ahead of the US in certain key ways.
1. In Canada, our bank/atm cards are our debit cards. The entire system is linked with a joint network called Interac. When you open a bank account you get a chip/PIN enabled card that allows you to make direct withdraws from ATMs, as well as instantly buy something from a terminal at a store. Credit Card providers are shut out of this system, and its 100% penetration with Canadian banks has made it the primary consumer choice for payments. Yes, security is a bit of an issue, hence the high rate of chip adoption in Canada. See: http://en.wikipedia.org/wiki/Interac
I don't use cash and haven't for years. I only pay with debit.
The practice of charging $x to use your card (whatever it is) by smaller businesses is actually against their terms of service and you can technically report them.
In fact in 2000, Interac Direct Payment surpassed cash as Canadians' preferred method of payment,7 and debit card payments have continued to grow.[1]
Offering credit cards only is a bad choice for a business, since Canadians will be looking to use Interac as well. The entire "debit card" market as Americans understand it doesn't exist in Canada for exactly this reason.
Re: Fees - Many banks now offer no fee debit usage. Such as my credit union - Coast Capital Savings. I haven't paid a surcharge on my debit card use since like 2001.
1. http://www.cba.ca/en/media-room/50-backgrounders-on-banking-...
Also the debit system has been ubiquitous for 28 years.
"Square Register is the free app that allows anyone to safe and secure credit card payments with[...]"
That said, it isn't a big deal to me. Square is really cool and I hope it will be available in Australia at some point, though I won't be holding my breath.
;)
While these are valid concerns, Stripe transactions are still accepted and I'm sure there's a decent chunk of places using stripe. By the time chip is universal, I'm sure Square will have addressed this shortcoming. As for Interac, I'm presumig that the expansion to Canada will also include the Starbucks partnership, so I imagine it can't be far behind.
The regulatory environment is much different in Canada. The biggest thing I see here is the fact that a startup with significant attention and traction is entering our market. When they partnered with Starbucks, I was curious if that would mean they would provide coverage across North America and it definitely looks like they are. In the short term, I think Square Wallet is the key takeaway here. Mobile payments are gaining some serious steam and Square has a big chance to establish an early lead.
But I think it will take a long time for those others to switch or even consider using a different platform. I'd guess that this is also what Square assumes.
But there's a big opportunity here that I enjoy dealing with in the US but hate here in Canada. I don't use cash and I travel a lot. I have to go to the airport by taxi frequently. In Canada it's a pain in the ass because they actually get out the old carbon copy machine and the drivers complain all the time. In the US the driver hands me his phone with a Square on it. So much better.
In the short term, it meant that Square would process all of Square's payments on the backend. Square app-integration would occur in the long term. My line of reasoning was basically that Square's launch in Canada closely coincides with the Starbucks partnership, which means they will be processing all of their Canadian transactions, which has to include Interac.
If/when the Starbucks app transitions to the Square wallet type implementation, it would act as a catalyst for Square adoption in Canada. And you raise a good point, the app will change greatly once it's implemented.
This is especially true for higher-ticket items like silver jewellery, where I'm not likely to have $60 kicking around in my pocket, but I'll have no problem putting $60 on my Visa. Personally, I also find it hard to part with $60 in cash (more tangible) vs. putting it on my Visa or debit card.
For actual businesses (like bigger food carts), a proper 3G bank terminal is probably the appropriate response, but in places where people aren't likely to expect any card use at all (smaller food carts, craft fairs, yard sales), having Square (or similar) is a net positive.
Square is a godsend for small businesses there. Square's all over Portland, for instance, not just at yard sales and craft faires but in real businesses because it's an absolutely disruptive form of payment that lets them avoid some onerous fees and setup costs, and it lets them accept debit because debit piggybacks on the credit system in the US.
But it's pretty crippled for that here in Canada. I know several small business, including my wife's, who were dying for Square to come here, because getting set up with a proper payment terminal in Canada is obscenely expensive for a small business.
But there's absolutely no way that they could use this as offered, with zero debit support, ubiquitous customer demand for debit usage, and no support for chip-reading in an environment where chip usage will be mandatory in 2 years and in which not using a chip already causes credit card transactions to be declined as 'suspicious' at a fairly high rate.
Between that and the total lack of Interac support, this is honestly a pretty lame offering. It feels like Square has absolutely no awareness of the current state of Canadian payment systems.
Canada is on the cutting edge of payment systems, for all that we have crummy shipping infrastructure.
Square in Canada is good thing, and I'd say potentially far more disruptive than they were even in the US. Having been in a seat where I had to negotiate and deal with almost every payment provider in Canada, and all of them verging on being downright evil IMO, a service that focuses on the customer experience (both merchant and end consumer) will be a fun disruption to watch.
If your card only has swipe (like US tourists), presumably their institutions will still accept a swipe as valid authentication.
The banks have been distributing FAQs with all of these answers for years, btw.
It's still pretty common to have 2-mode readers there (wehere you can chip or swipe), though they're slowly becoming rarer and I can't remember anybody actually using swipe.
The problem here is that Square is launching with, for the Canadian market, antiquated, rapidly approaching EOL technology, and given no indications if or when they'll catch up to the standard -- or even that they realize that their offering is substandard here compared to the US. Will they issue a new reader next month? A week before the deadline? Will they just pull out in 24 months?
No answers forthcoming.
(and that's on top of the other issues, like the vast majority of customers demand debit, and chip card credit cards that get swiped for transactions get declined at very high rates because it's highly correlated with skim fraud)
Personally, I'm hoping Square adds a new dongle with tap-to-pay (Paywave/Paypass/Interac Flash), which would be even more convenient.
For the time being, as a temporary measure while peoples cards are replaced with chip cards. Swipe is being fazed out entirely by 2015. You're already far more likely to get a rejected transaction or trip anti-fraud heuristics if your transaction is not chip-auth'd.
Edmonton I'd say > 95% of retailers are chip-and-pin. Every other place I've been is about the same. Which given that there's two years until they turn the legacy swipe system off entirely, is about where you'd expect everywhere to be in the transition.
Edit: also, while I'm not from Canada, I was there this summer and I had no problems getting my card swiped. Everywhere I needed to buy something took my card and swiped it. Hence my surprise.
The first (presented immediately after registering) required me to provide a Zip code (and wouldn't accept a postal code) and the second (found through account settings) allowed me to provide a postal code but required I select a state (and only presented US states in a drop down).
Clear examples of common localization issues. Hope they get it sorted out so maybe, one day, I could actually use Square in Canada...
I am super excited for this, though. I have a number of friends who sell artwork at various outdoor fairs, and I've inundated them with tales of how much easier theirs lives would be if they could get a credit card reader for their phone. It really reduces the friction involved in trying to make what is essentially a several hundred dollar impulse purchase.
edit: Is it just me, or are all the thinks in the press release broken? squareup.ca, square.ca, squareup.com/ca/ca/fr, none of these work.
which seems to do the same thing as Square. Anyone used both services and is willing to compare them? Kudos seems to be slightly more expensive ($50 signup + higher swipe fees).
Also, there's http://payfirma.com
Might not be your parts of Europe, though. :-)