"It's (profitability) always something we are driving towards but we want to make sure that we have a good balance between driving profit and investing in the company. Investing in the company means investing in more technology so we can continue and innovative and bring new products and features to all of our sellers. And as we do that we get to see more sellers and we get deeper relationship with sellers than we do have," Dorsey said.

Growth at Square has been steady and has impressed Wall Street with shares up over 46 percent in the last six months. Revenues in the fourth quarter of 2016 were up 21 percent year-on-year to $452 million while its net loss narrowed to $15 million. Dorsey told CNBC that the U.K. launch would have a "fairly meaningful" positive impact on revenues this year but did not give exact figures. The CEO also said that it would not increase Square's capital expenditure or dent its path to profitability, something the company is on the way to achieving.

"There's over 5 million small businesses in the U.K. and we think less than half accept credit cards so we think the market opportunity is huge," Dorsey said.

The founder, who is also the chief executive of Twitter, would not reveal how many merchants were on board for the test but said it was "enough" and across many different business areas from restaurants to flower sellers.

"The U.K. is really interesting in that we see a lot of card usage through tap … Which is perfect for our new card reader," Dorsey told CNBC in a TV interview recorded ahead of the launch.

Square sells card readers that can be used on-the-go via a mobile device or in-store, as well as an accompanying app for merchants to see and analyze transactions. The U.S. firm is bringing over its contactless card reading hardware and software and began testing with a handful of merchants a few months ago. The launch sees the firm looking to gain a foothold in the European market.

Square is currently available in Canada, Japan, Australia and the U.S. The U.K. is the fourth country that Square has expanded to outside of the U.S. but it is the first in Europe and will give the payments firm a base to expand into the rest of the continent, though there was no timeline.

"It's a case by case basis because the regulatory environment is different in each country and every market that we've seen there's been some custom tailoring that we need to do, so we're focused on making sure that the markets we have really scale to what we expect it to scale … And then we are always looking for opportunities to expand," Dorsey said.

Expanding products abroad

But Square isn't the only company in Europe in the space. Swedish start-up iZettle is one of the big payments players in the region and offers a rival card reader service as well as other products such as loans for small businesses. Square charges a transaction fee of 1.75 percent for in-person payments, and 2.5 percent for other transactions such as online or via phone. The Square card reader costs £39 ($49). IZettle meanwhile charges £59 for its reader with transaction fees beginning at 2.75 percent and going as low as 1 percent if you end up doing more transactions.

Square will be locked in a battle with iZettle to acquire users. But it also has other products such as Square Capital - a lending service for small businesses - but these are not launching in the U.K. yet. Instead, Dorsey said offering credit card payments first to establish Square is the best way to expand.

"We'd like all of our products to be global solutions ... Every one of our products has a lot more regulatory burden than a traditional start-up does. So (Square) Capital for instance is lending and lending is highly regulated ... So we are starting with the most critical thing which is being able to make the sale, accepting credit cards and then as we get really good at that we will talk with the regulators about bringing more of our products like Square Capital … To every one of our markets," Dorsey told CNBC.

AI acquisitions eyed

Square has also been very acquisitive over the years, and recently bought OrderAhead, a company that lets people order food via an app and then go to collect it. Dorsey told CNBC the company is looking for further acquisitions and "interesting teams and products" in markets across the world, particularly in the machine-learning space. This refers to artificial intelligence and automation. Dorsey said developing or acquiring such software would allow Square to get a deeper insight about the risk profile of its merchants to be able to offer them more products.

"So machine learning and folks who have more of a data science, algorithmic background are teams that we're very interested in right now, and that's both from a risk standpoint but also more automation and taking less mechanical action as a seller so that you can … Just let Square do the right thing to provide you an insight about your business and the growth," Dorsey said.



