Starbucks Invests in Square

The mobile processing company will handle all credit and debit card transactions at Starbucks locations throughout the United States.

August 09, 2012

SAN FRANCISCO - Square has formed a partnership with Starbucks to provide processing for all credit and debit card transactions at U.S. Starbucks stores, The New York Times reports. The switch will take place this fall.

"Anyone who's going to break the mobile payments barrier in the U.S. has to overcome the resistance to try anything new when everything we have works really, really well, even cash, which is very convenient," said Bill Maurer, director of the Institute for Money, Technology and Financial Inclusion at the University of California, Irvine. "But if a big merchant jumping into some mobile payment solution signals to other merchants that there is an opportunity here, that might change the psychology for other merchants."

Starbucks will pour $25 million into Square, and Starbucks CEO Howard Schultz will become a Square board member.

Since 2011, Starbucks customers could pay via the company's own mobile payment app, which has proved popular with customers. With the move to Square, customers will use Pay With Square mobile phone app.

With its Starbucks partnership, Square will greatly expand its user network, which currently mostly consists of small businesses that utilize Square's credit-card reader. "Starbucks is one of the largest organizations in the world, taking technology like Square," simple, fast and focused on customer experience," and bringing it to a massive scale," said Jack Dorsey, Square's co-founder and chief executive.

Meanwhile, Crumbs cupcake chain will not be serving Starbucks-branded drinks at all of its 51 locations, Nation's Restaurant News reports. This will make Crumbs the biggest chain outside Starbucks itself to serve its branded beverages.

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