Modern payments for smaller businesses is simply good business, according to Square

Cathy Vigrass, Head of Canada at Square, recently sat down with Payments Canada to talk more about the appetite amongst small businesses to modernize payments and how Square is meeting this desire and helping Canadian sellers start, run and grow their businesses. We also talked about the potential impact of real-time payments on sellers and others in the financial ecosystem, and the value Square places on innovation and collaboration.

Canadian small businesses truly desire to ditch cash and cheques in favour of new payment methods. From Payments Canada’s end, over 80 per cent of Canadian small businesses want more payment options like e-wallets and contactless tap, yet small businesses remain the heaviest cheque users. What have traditionally been the barriers—amongst smaller businesses—to adopting new payment methods, and how is Square helping small businesses make the leap to modern payments?

Despite a strong appetite for new payment methods amongst many businesses and across different industries today, small businesses still face traditional barriers in accepting card payments. Getting started in accepting card payments can be time and labour intensive and complicated. It requires a lot of forms and background checks, and then once you submit your application you have to wait a couple of weeks for approval and—if approved—you have to understand complicated rates and pricing, and deal with renting clunky point-of-sale hardware. There is also fear among small businesses of getting locked into a contract. As part of our recent national study we saw that one-third of cash- and cheque-only small businesses in Canada don’t want to be locked into a contract. Perhaps most interesting, though, we found that over one-quarter of cash- and cheque-only small businesses in Canada think their customers don’t want to pay by card, even though our study revealed nearly 80 per cent of Canadians prefer paying with cards, first and foremost.

In helping small businesses make the sale, we simplify the payment experience. Square makes getting started easy for everyone. Our onboarding process, unlike traditional set-up processes, is online and self-serve. Because of the way we approach risk, our acceptance rates are above average and fast. Businesses can sign up in five minutes. Taking payments also becomes simple as our pricing is clear and our newest Square card reader makes hardware costs affordable. Sellers can accept payments with Square in person, via invoice, online or in app instantly. Sellers also get paid fast — the next business day. By removing the complexities of payments, we help our sellers focus on their customers.

What benefits have sellers, customers and other partners in your financial ecosystem experienced with “friction-free” payments via Square? What do you feel is the immediate and bigger-picture value associated with modern payments?

A seamless payment experience means that sellers never miss a sale. During the Payments Canada SUMMIT, I shared Square’s founding story. Square’s cofounder, Jim McKelvey, was operating a glass-blowing business and he was selling one of his handmade glass faucets for $2,000 but lost the sale because he couldn’t accept a credit card payment. He later learned this wasn’t just a challenge for him but also for others within his community. Our recent study supports this notion of lost opportunity. In fact, forty-seven per cent of Canadian consumers avoid businesses that only accept cash. The same number of Canadians say they haven’t made a purchase because they weren’t able to pay by card.

Bottom line, if businesses are not accepting card payments, they are missing out on sales, and they may not even realize it. Incremental sales become available to businesses when they can accept the forms of payment that their customers want to use. That’s the immediate value of modern payments.

When you step back and think bigger picture, you realize that although making the sale is the most critical need of a small business, the next most critical challenge is organizing business operations. Small businesses often end up stitching together disparate systems and processes such as inventory tracking, staffing, accounting and more.

While payments are at the core of Square, we’re also helping businesses organize and manage their business operations in a way that is digital and integrated. When a business owner has a holistic view of their business, that incorporates sales trends, inventory, employees, they can make informed decisions to increase sales, save time and reduce costs that helps them grow.

In Canada we’re in the process of delivering a “real-time rail” payments system which will deliver faster, smarter and more convenient payments for Canadian households and businesses, supporting overlay services that serve consumers and small and medium-sized businesses. In your perspective, what is the ideal business model for using real-time payments capability?

We’re very excited about Payments Canada’s modernization program and enthusiastic about adopting a faster payments environment in Canada. Cash flow is important to small businesses. Our national study indicates 54 per cent of small businesses cite maintaining cash flow as a top concern. To help our sellers get paid, we currently advance money faster than we receive it, so having a real-time rail in Canada that offers the opportunity for real-time payments will help our sellers access their money even faster. Having their funds readily available will save businesses from dipping into other sources of income to cover immediate invoice, purchasing, shipping or payroll needs.

It’s been said that the most successful companies are innovative in the way they approach innovation. How—in your words—does Square approach innovation? Besides further enabling payments, what’s next on the horizon for Square?

Square’s purpose is economic empowerment. We believe everyone should be able to participate and thrive in the economy, and each of our products and services is a direct extension of that philosophy. That’s the basis for how we started enabling sellers to accept card payments and access the financial system more broadly. And that framework is how we think about innovation. We put our customers first. We constantly ask the question: How can the financial system better serve people? We innovate for our sellers, and as such we invest heavily in listening to them, learning from them and helping them grow into their ambitions. We serve sellers from a diverse set of industries, from contractors to cafes, lawyers to landscapers, retail stores to restaurants. Our sellers also range in size from a side hustle to multi-location businesses. We believe that the diversity of our sellers underscores the accessibility of our offerings.

There’s still work to be done to bring more cash and cheque-only businesses into the financial system. With a report by the Bank of Canada indicating that while nearly all large businesses accept cards, only two-thirds of small or medium-size businesses do, we’re focused on giving more individuals and businesses across Canada access to card payments so more people can participate in the economy.