×

Square benefits from word of mouth: Dorsey

Square might have reported a quarterly loss in its first earnings report, but retailers are raving about the financial services company. The service could be found at coffee shops, at small businesses and even in the pockets of entrepreneurs, as the financial services company considers "that everyone should be able to accept credit cards."

While millions of dollars are poured into marketing and advertising yearly, Square Inc.'s CEO, Jack Dorsey, told "Closing Bell" that the company "benefits of word to mouth."

To businesses, Square represents more than an easy payment method. It's a away to use technology to simplify experience. Emily Dobies, manager at Ritual Coffee, a square user, told CNBC in a recent interview that the payment system allows the cafe to measure product success, which eases the decision process of investing in premium products.

Liz Fiedler, owner of San Francisco yogurt outlet Loving Cup, told CNBC that the company "pretty much [does] everything" from its Square terminal.

"Another great feature of Square is the tipping screen; it really increases the amount of tips employees get," she said, adding that the company has seen a 50 percent increase.

Square charges retailers 2.75 percent per transaction and deposits payments to a company's bank account within two business days. The mobile payment company also offers business financing services, which provide business investment funds as early as the next day.

Square Capital raises the question of whether the service will be a threat to the banking system, but Dorsey told CNBC that a bank is behind its transactions.

"The banking system today works pretty well," he said. "A lot of where we think we could have more value is how do we make it more accessible and more inclusive."

Square offers employees stock-based compensation, which has come under criticism, but Dorsey thinks it is important for building and keeping a team together.

"Fundamentally everyone feels more like an owner of the business," he said. "We want people that are continuing to provide ideas to grow the business in the right way."