Square launches first international service in Canada

Square, which has been talking up its international plans, took its first concrete step with the launch of its payment service in Canada Wednesday. Canadian merchants will now be able to take payments through an iPhone (s aapl), iPad or Android (s goog) device and access Square’s flat 2.75 transaction fee.

The expansion begins a larger rollout that will likely bring Square to Europe and Asia and other markets where credit cards are in use. The Canadian launch appears to be aimed at helping merchants accept credit cards; there’s no mention of Square Wallet, Square’s mobile payment application that lets users pay by giving their name at a business.

Square is picking up steam following a $200 million funding round and a big deal with Starbucks (s sbux), which will start taking Square Wallet payments at its 7,000 locations next month. It now has 2 million merchants and individuals taking Square payments and it’s doing $8 billion of processing on an annualized basis. That number should shoot up with the Starbucks partnership since Starbucks will be using Square for processing.

Square faces more challenges and opportunities as it goes international. It will take time to establish partnerships in each country it does business. And expansion also means more competition. PayPal (s ebay) has launched PayPal Here, its small business payment tool, in Canada, Japan, Hong Kong and Australia.  IZettle, sometimes referred to as the Square of Europe, just expanded its latest $31.4 million funding round with participation from American Express (s axp).

Square’s international efforts are led by Alyssa Cutright, PayPal’s former¬†VP of products for North America who was lured away earlier this year. Merchants north of the border can hit up Square’s new Canadian website to order a free dongle and get started.