Square (SQ, Financial), mobile point of sale (mPOS) provider, is expanding into the U.K., venturing into its first European market.
The company supplies terminals that connect to tablets and smartphones to allow retailers to accept NFC, chip and PIN payments. The company also provides apps for businesses that allow them to track vital information including digital receipts and sales data.
The U.K. is the fifth country to receive Square's services with mPOS already available in the U.S., Australia, Canada and Japan.
Square will compete with other well-established vendors that supply mPOS equipment, including iZettle, Verifone (PAY, Financial), SumUp, Payleven and PayPal (PYPL, Financial).
"We look forward to working alongside the millions of entrepreneurs and thriving small- and medium-sized businesses across the U.K., especially those who do not yet take card payments," said co-founder Jack Dorsey in a statement. Dorsey is also the CEO of Twitter (TWTR, Financial).
Square says small- and medium-sized businesses in the U.K. can open a small business merchant account and use the company's credit card reader to accept payments using mobile devices.
Small businesses account for 99.3% of private-sector business in the U.K. But fewer than half of these businesses accept credit cards. Square estimates that 70% of shoppers prefer to pay by credit card. The company views its expansion as an opportunity to bridge that gap.
An expansion into the U.K. also creates the potential for the company to double its merchant base.
The company's expansion into the U.K. is no surprise, as a report from Reuters in July 2016 revealed that Square had established a business named Squareup Europe.
In 2016, the company also added Paul Deighton, a member of the House of Lords and Britain's former commercial secretary to the treasury, to its board of directors.
Whlie Square is attempting to target larger businesses with higher transaction volumes, the majority of its revenue comes from businesses that take in less than $500,000 per year in payments.
Still, the company's foray into Europe may prove to be timely as the U.K.'s financial sector faces challenges as the country prepares for Brexit. Visa Europe has also predicted that the use of mPOS systems by small- and medium-sized businesses will accelerate in 2017.
News of the U.K. launch did little to budge Square's stock, which has been hovering in the 16.70 range for weeks.
Shortly after news broke of the U.K. launch, rumors circulated that the company was in talks to purchase Yik Yak, a social network app that allows anonymous posting. If the deal were to go through, Square would take on the social network's employees, but would not develop its technology.
Square is also expanding into business loans and financial software. Square Capital, its lending division, uses merchant data to offer qualifying businesses short-term loans with fixed rates. It also offers a peer-to-peer lending unit called Square Cash.
The company processed $50 billion in payments in 2016. Chief Financial Officer Sarah Friar says the company expects its adjusted EBITDA margin to expand by five percentage points this year.
Square went public in 2015.
Disclosure: Jacob Maslow does not own any shares in the company listed.
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