Starbucks and Square have partnered up, and beginning this fall, customers will be able to pay for their coffee with their iPhone or Android phone, using Square’s payment app. As part of the deal, Starbucks will invest $25 million in Square and Starbucks CEO Howard Schultz will join Square’s Board of Directors.
This fall, Starbucks customers will be able to pay for those non-fat, double-shot, venti frappuccinos with their smart phones, by using the Square app.
Starbucks has invested $25 million in Square, a mobile-payments company founded in 2009 and based in San Francisco. The CEO of Starbucks, Howard Schultz, will also join Square’s Board of Directors, and says in a press release, “Both Starbucks and Square take a similar approach when building products and running our businesses, and together we can bring the best possible payment experience to Starbucks customers.”
“We’re proud that Starbucks chose Square, as we share the value of always putting customers first,” Square’s co-founder and chief executive officer, Jack Dorsey, said in a statement. “More than 2 million individuals and businesses can already use Square. This partnership will accelerate our ability to provide them with the tools they need to grow their business and thrive in today’s economy.”
Cash, Credit, or Phone?
To pay for their coffee on the go, using this new mobile payment system, all customers will need to do is download the free Square payment app from the Apple app store or Google Play, for Android operating systems. Then they will set up an account and add the credit and debit cards they’d like to use with Square. They’ll pay using their phone, with no need to carry the actual credit or debit card. They’ll also have an electronic receipt so they can keep track of spending right from the Square app.
“As the largest retail mobile payment platform in the U.S., we’re excited and proud to accept payments with Square,” Starbucks’ Schultz continued in the press release announcing the partnership. “The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behavior.”
Cash Only? Not Anymore!
Square lets merchants of all sizes accept credit and debit cards, bypassing expensive interchange, or “swipe” fees from credit card networks. Square does charge a flat 2.75 percent fee per charge to use their service, but they handle the back-end charges by credit card issuers – the ones that were at issue in the long-dragged-out class action suit that is still awaiting settlement, between Visa, MasterCard, and several large retailers.
Small businesses that could not accept credit cards will find it easy and convenient to use Square – they simply need to plug the adaptor into a smart phone to accept payments, so anyone from a food truck or flea market vendor to a street musician or a kid with a lemonade stand could potentially accept credit card payments.
Says Starbucks’ Schultz: “As an entrepreneur, I understand how critical it is for new businesses to have easy and affordable access to card processing while also giving customers a choice in how they pay. Because Square’s revolutionary technology allows anyone to accept credit and debit cards, it gives entrepreneurs an essential tool to jump-start their business while providing existing small companies access to new customers.”
Though many people are reluctant to adopt the mobile payment model, citing security concerns or perhaps just reluctant to change their habits, Starbucks stores accepting Square will surely speed up the process of the mobile payments revolution. Many people may find that the payment method speeds up their morning commute, by making that coffee line move just a little faster each morning. With a strong backer like Starbucks, Square is poised to lead the way to the future of mobile payments.