Live in 7,000 locations from the Autumn.
This is a big one. Historically Starbucks has rejected all third party mobile payments systems, choosing instead to operate its own proprietary solution.
The Starbucks mobile payment app lets users load money and pay for items by displaying a 2D barcode, which is scanned at the register as if it were a card.
It processes around a million payments a week, and was available in 14,000 worldwide locations by June.
Now, the coffee giant is throwing its weight behind Square in a deal that further establishes the latter's position as - arguably – the top dog in the mobile payments space.
Customers will still be able to use the Starbucks app, but will also be able to use Pay With Square. This is the advanced system that processes a payment without any physical interaction.
Instead, the Square app notifies the store that the customer has entered (via GPS), and the customer’s name and photo pop up on the cashier’s screen. The customer gives the merchant his or her name, and the payment is complete.
It's the kind of 'zero friction' transaction that represents the nirvana for mobile payments propagandists.
The deal is part of a wider partnership between the two firms. Other terms include:
* Customers will be able to use Pay with Square from the Autumn, and find nearby Starbucks locations within Square Directory
* Square will process Starbucks US credit and debit card transactions, which Square believes will deliver economies of scale helping all its merchants
* Starbucks customers will be able to discover local Square businesses using Square Directory from within a variety of Starbucks digital platforms
* Starbucks will invest $25 million in Square as part of the company’s Series D financing round
* Starbucks' chairman Howard Schultz will join Square’s board of directors.
“As the largest retail mobile payment platform in the US we’re excited and proud to accept payments with Square,” said Howard Schultz.
“The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behaviour and creating equally disruptive opportunities for business. 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.”
Of course, Square also operates the Square Register system, which enables merchants without credit card readers to use a tablet or smartphone to process card payments.
The service has 2m merchant users and is estimated to process $6bn this year.