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Fair and Square

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Jack Dorsey may not be a household name, but if you are keeping tabs on the skyrocketing growth of the Square commerce experience or have ever Tweeted, you’re familiar with his handiwork. The 36-year-old innovator co-founded Twitter and developed Square in 2010. At the time, most weren’t sure what to make of the credit card reader that snaps into a smartphone, allowing anyone to accept credit cards anywhere, anytime. Today, Square processes more than $10 billion in transactions annually and has signed up more than three million individuals and businesses — including more than 7,000 U.S. Starbucks locations. Square’s portfolio now includes Square Register, a full POS system for businesses to accept payments, track inventory and share menu and location information, and Square Wallet, allowing users to pay with their name at favorite local merchants, save receipts, discover nearby businesses, explore menu listings and even send gift cards. What’s next for Square? The commerce solution is now available in Canada, and Dorsey is hoping to go global shortly. Also on the horizon is a possible IPO for the company, now valued in excess of $3 billion. STORES editor Susan Reda recently spoke with Dorsey.

Why do you think Square took off so quickly? Our first three merchants were a flight instructor, a flower cart and a coffee store in San Francisco. Little by little, we learned more about payments; in particular, we learned a lot from the coffee store around what they needed for accepting credit cards and ... to run their business. We built a full cash register that accepted credit cards and cash, accounted for checks and gave electronic receipts via e-mail or text message. Then we [built] a POS that accounts for the entire business. The most important thing Square provided ... was analytics. How many cups did they sell that day, or what percentage of people bought biscotti? What was their busiest hour; which is their busiest day? A key differentiator in terms of running a successful business is understanding how it is performing and getting clear, simple data that aids decision-making ... We put a high premium on the data that we are giving to our merchants, so that they can build their business and ... recognize and treat customers better.

Describe your ideal retail experience. The ideal is the experience that we have with Square Wallet. I can walk into a store, ask for a coconut sorbet and say, “Just put it on Jack.” I do not actually take out my wallet or my phone ... the merchant can verify that it is me by looking at my picture on the POS screen. They click on that and it just charges my credit card. We believe that the mechanics of payment should really disappear. ...You should be able to just walk to the counter and, with a quick prompt, everything happens.

The Starbucks partnership was a tipping point. Will other large retailers come on board this year? When we launched with Starbucks we had a lot of interest from some major retailers in many different spaces ... We are building a system and a technology that will scale from an individual using it for accepting credit cards at a garage sale ... all the way up to the largest organization ... We want to build technologies that level the playing field, so that individuals and companies can compete on the merit of the products that they offer. The most compelling thing: The software stays the same for everyone.

How does Square deal with swipe fees? Normally swipe fees ... vary depending on the credit card that the customer uses ... [We] simplified the fee to 2.75 percent for every card. ... We pay Visa, MasterCard, AmEx and the banks out of that 2.75 percent, so that the merchant can focus on one thing. Along with simplifying the fees, we’re working to reduce inherent risk and fraud. We can bring technology to [mitigate] the risk and minimize the fraud of any particular system – and ultimately bring the cost down for everyone. It’s a long road ... but the Square technology can bring more security to every transaction. Square has a simple cost structure. We give away the reader and the software, which is a full clientele system. ... We charge one rate ... instead of forcing merchants to pay a monthly minimum, a set-up fee and transaction fees and, on top of that, an interchange ... The goal is to make payments simple so that people can immediately understand how it works, no matter their size.

You believe in management by wandering. What do you mean by that? We have an open office environment. I spend the majority of my weekdays walking around and talking to people about what they are working on ... Management by wandering allows for moments of serendipity where I hear something that I could never schedule, and it makes me think in a different way. All my meetings are in the open too, so that anyone can walk by and hear something that they may not have expected to hear, and that may cause them to think in a different way. It’s about seeing things from a different perspective and increasing the potential for great creativity.

Business experts use the word disruptor to describe you. Compliment or a criticism? Disruption is just moving things around, without any sort of vision, purpose or values, and it actually adds a lot of confusion to the world rather than clarity. ... I prefer to focus on more revolutionary things that have purpose, value and a significant mission, and move the world forward. Square is doing something that considers what is broken in the market, and is turning it around. We’re causing a movement and a revolution of sorts. ...We are starting with a small [revolution], but I think it points to something much larger.

What do you see as the next big thing? Over the last 30 years, we’ve seen the evolution from a mouse and a keyboard, to a cursor, to using our fingers. Now we’re seeing a shift to using our voices to control computers. There is a movement toward using what we are born with to empower technology. ... Square lets you keep your phone in your pocket or handbag, walk up to the counter, say your name and make a transaction. There’s an exchanged value, but you don’t see the technology. It’s extremely compelling to think how technology is actually disappearing.

Where do you see yourself three years from now? I think I can influence and have a positive impact by focusing on building and creating things. We want to build a company that is sustainable, something that lasts beyond one generation of a human life and make a deep impact on the world. My work focuses on building a great organization, so that we can build the great products that people love.