Square to become payment processor for StarbucksBy Rick Burgess
Starbucks, a company known for its forward-thinking nature and $1.95 cups of coffee, has made a deal with credit card processing outfit Square. Square will be providing the popular caffeine-based franchise with its payment processing services while Starbucks invests a cool $25 million into Square. The investment is little more than a rounding error for Starbucks' multi-billion dollar annual revenue, but also lands Starbucks' CEO Howard Schultz a seat on Square's board of directors.
The deal may also send sizeable waves throughout the industry when it comes to mobile payment methods. Starbucks, the third largest restaurant franchise in the U.S., was an early adopter of mobile payments and currently employs its own barcode-based, mobile phone payment system. The beverage-maker's deal with Square could pique the interest of other franchises who may chose to follow suit, as the company touts lower than industry-standard processing rates. Additionally, NFC hasn't quite caught on yet, giving businesses using Square another advantage: the ability to receive wireless payments.
"As the largest retail mobile payment platform in the U.S., we're excited and proud to accept payments with Square," said Howard Schultz, Starbucks chairman, president and ceo. "The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behavior 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."
Source: squareup.com, press release
NFC, or Near-Field Communication, has been a much heralded technology which enables customers to pay wirelessly via gadgets equipped with NFC chips. As with most technologies in their infancy, NFC has an uphill battle before it becomes a common standard. Adoption of NFC has been limited for a number of reasons, not the least of which are hardware, availability and interest.
Unsurprisingly, Square has been very critical of NFC. Unlike NFC though, Square's system will allow coffee drinkers to perform store check-ins and pay for items though its mobile app at any distance from the register -- possibly even allowing customers to order without ever waiting in line.
It seems as though Starbucks' continued reluctance to roll out NFC and its new courtship of Square could be a bad omen for the wireless payment technology. Starbucks may yet introduce an NFC option though, but NFC isn't explicly mentioned in the press release. There is also no mention of how this partnership will affect Starbucks' existing barcode payment system, but it is probably safe to assume they will co-exist for some time.