Jack Dorsey, CEO of Square and chairman of Twitter, talks about competition in mobile payments, the tech-centric challenges for San Francisco, and Square's plans for 2014.
FORTUNE — It’s been a busy week for Jack Dorsey, the co-founder and chairman of Twitter and CEO of Square. Last week, he revealed to Fortune that he decided to return 10% of his stake in Square to the company. On Monday, he joined the board of the Walt Disney Company DIS . Fast-growing Square remains his main focus, and last week he discussed the company’s progress, as well as the growing complaints about the tech industry in San Francisco, with Fortune senior writer Miguel Helft. Here’s an edited transcript of that conversation.
What are the two or three most important things that Square has accomplished this year?
No. 1 is our people. We made some pretty massive hires this year. [Business Lead] Francoise [Brougher] came to us from Google and [Product Engineering Lead] Gokul [Rajaram] came to us from Facebook FB . They’ve injected an excitement, enthusiasm and clarity into the company that you need at our phase of our growth.
Two is international. We went to Japan this year. If you ask any company, it’s the hardest market to enter into. We’ve learned a lot, which we will now apply to other markets.
Three is our product launches. We did Market with a team of 10 people in three months. It was our fastest growing product until the next one that we launched, which was Square Cash. They represent two very different audiences and two things that are fundamental to commerce: Giving a local business the ability to sell nationally with the flip of a switch and enabling anyone [transfer money] with two devices they already have in their pocket [a phone or a tablet and debit card].
Square Cash has a lot of competition from banks and other tech companies. What does Square bring to the table and how has it done?
We bring ease and simplicity to the table. It’s done very well. It the most viral product I think I’ve ever seen because everyone who receives cash has an opportunity to send it. It’s being used for real things because the ticket size is pretty massive. It’s not just $1, $2 or $3. At the beginning of the month we see this massive spike in usage because people are paying rent. They’re paying their roommates back for the rent check. They are paying the landlord directly. (Dorsey declined to say how many people are using Square Cash, but the company claims millions of dollars are being sent every week.)
When you launched Stand, an iPad point of sale system, you signaled you were going after larger merchants. Leaving aside your biggest partner, Starbucks, what is the profile of a Square merchant today?
We wanted to build a progression. So we started with the individual provider like a piano teacher, and we saw (San Francisco coffee house) Sightglass use it for everything. So we built a software register, but (merchants) were still using the card reader. Stand really solves the velocity of transactions problem. It allows people to go through a line very very quickly. Some businesses obviously fix the velocity problem by putting more of the independent readers everywhere. Some solve it at the counter. We wanted to make sure we have flexibility there. We are seeing someone like Blue Bottle that went from 5 stores (in San Francisco) and now it’s going to New York and wanting one system to combine all.
How important is it that you have those larger merchants?
It’s important to us that we are building a product that anyone can take off the shelf and start using it. We are not really optimizing for one particular size of merchant, and we don’t want to.
At the low end, there is now a lot of competition for mobile card readers. Has that affected your core business?
Not really. A lot of people put emphasis on the reader and not enough emphasis on the price and the availability of funds and the immediacy of funds. We have had folks who have tried the various other readers and then they realize, “I still have to go through this process, I still have to wait a week for my funds to be held, it’s a variable rate instead of one rate for all cards.” The fundamentals of the business are not necessarily the hardware.
Do you have plans to go public in 2014?
(Laughs) I was so happy when I never had to answer this question anymore for Twitter (TWTR). We always operate with discipline so we can make a choice of whenever is right for us.
Critics say tech companies like Twitter, Square, Google and others have heightened income inequality in San Francisco and made it harder for many others to live in the city. Do you think the focus is misplaced?
It is really disappointing and it weighs on everyone. I think the most important thing happening right now is there is a conversation about it. It’s become a national conversation. Our mindset here is we are going to act locally. One of the things that we did which I am very proud of is that every Friday at 11 am, we had a bunch of people, including me, go out and pick up trash around the neighborhood. There’s a lot more of that that we can do.
Do you think the industry has an obligation to address some of these issues?
Yes. I think there is a social responsibility that all companies have, and we certainly carry that torch.
Yet there is a sentiment out there that you’re part of the problem.
I think there are multiple problems going on. I think SF as a city has always minimized and constrained the amount of residential resources. I think the city is doing a lot of work to address that. As you address that, the scarcity falls down and the prices can travel down as well. That’s No.1.
No. 2, we are creating jobs and I think we have to be proud of that. I want to create more jobs in San Francisco. I want San Francisco to be a place that people want to live, and not just tech people and not just well-offs but everyone. This is a company where we train people to go upmarket. We want to see more of that.
It’s going to be on every company to figure out (what to do). And I definitely think it is a big role of government. As long as the conversation is happening, things are going to improve.