Starbucks, Square in $25m m-payments deal

Starbucks is pouring $25 million into electronic payments start-up Square in a partnership that expands mobile payment options at the coffee chain, The News reveals.

Starbucks customers will be able to use the Pay with Square mobile application to buy their Java beginning in the fall, and find nearby Starbucks locations via Square Directory.

Meanwhile Square will process Starbucks US credit and debit card transactions, sharply expanding Square's scale and, in turn, lowering Starbucks's payment processing costs.

Square payment has signed up a total of seven million merchants, mostly small businesses and individuals, writes Fobes.

“We are the number one company not in the US but in the world in terms of mobile payment, transactions and dollars,” says Howard Schultz, founder and CEO of Starbucks. The Starbucks app was unveiled in January 2011. Within three months of its unveiling, the app reached three million mobile payments. At the end of last year, the app has processed more than 26 million mobile payments with a total $110 million of Starbucks Card reload via app.

By July 2012, the app chalked up 60 million transactions. The coffee chain has already managed to unlock the potential of mobile payments. The Square partnership is a natural progression, the Phase 2 of Starbucks' mobile initiative.

According to SMH, at least initially, the Starbucks partnership will only rewire the way lattes and frappucinos are charged. Square technology will be integrated into Starbucks' existing point-of-sale hardware and consumers will not notice anything different as a barista swipes their credit cards.

But in the future, Starbucks said it plans to roll out certain cutting-edge Square products, including one that allows stores to use proximity sensors to pick up when a user carrying a smartphone loaded with Square's app has walked in the door. Clerks could accept payments simply by taking that user's name and charging their account.