Since launching two years ago in the U.S., Square, which enables merchants to accept payments via smartphone or tablet card reader, has become a go-to solution for businesses of all stripes, from local coffee shops to Starbucks. Cofounded by Jack Dorsey, who was the subject of our recent cover story on the company, Square now processes $8 billion in annualized transactions. Today, the company announced that it would be expanding to Canada–its first market outside the U.S.–a sign not only of its rapid growth but of its international ambitions.

Expanding to a different country is not simply a matter of hitting a switch. To crack the Canadian market, Square likely had to consider cross-border fees, different payment cards, varied country regulations, and so forth. While similar services already exist in Canada, like Payfirma, the new market will give the company access to a swath of new merchants and customers, who have yet to have the option of trying Square’s register and card-reader solutions. The launch also serves as an indication of how stateside payments startups are increasingly pushing for global acceptance. Stripe, an online payments startup, recently launched in Canada too, for example.

Most significantly, the more Square’s service expands, the more it’s likely to become commonplace among mainstream customers, who are more used to seeing traditional VeriFone point-of-sale machines than swiping credit cards through an iPad accessory. With an additional $200 million of funding at a reported $3.3 billion valuation–not to mention its recent headline-grabbing partnership with Starbucks to handle its payment processing–Square has palpable momentum as it heads up north.

[Image: Flickr user w00kie]