This fall, Square will begin processing all credit and debit card transactions at Starbucks stores in the US. Starbucks’s adoption of Square will really help get technology onto street corners nationwide and help to make it more mainstream.
“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,” he added, “that might change the psychology for other merchants.”
Starbucks is investing $25 million in Square which will value the company at $3.25 billion. Also Howard D. Schultz, Starbucks’s chief executive, will join Square’s board.
Starbucks has offered its own mobile payment app since last year and processes more than a million mobile payments a week. Customers will continue to be able to use it, but they will also be able to use Pay With Square, Square’s cellphone app, which eliminates even having to take the phone out of your pocket or sign a receipt.
When Starbucks uses Square’s full GPS technology, the customer’s phone will automatically notify the store that the customer has entered, and the customer’s name and photo will pop up on the cashier’s screen. The customer will be able to give their name to the cashier and the cashier will see that it is in fact the correct customer and the payment will be complete.
“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.
Starbucks will be the largest corporation to use Squares’ technology. According to Denee Carrington, a Forrester analyst, “We are still in the early days of mobile payments specifically, but the market is accelerating, especially the amount of innovation that’s happening in the marketplace,”
“My hope is that by creating a national footprint for Square technology in all Starbucks stores in the U.S., that it will be a catalyst for Square to get access to tens of thousands of other small business and democratize payments,” Mr. Schultz said.
An estimated 30 percent of American mobile phone owners are interested in using mobile payments, based on a survey polling about 7,600 adults in the United States, according to a Forrester survey.