Square has won a significant deal with Starbucks, which will see it processing all of the coffee chain’s credit and debit transactions, as well as allowing customers to pay using Square’s payments system.
The deal involves the two companies getting very close indeed. Starbucks is investing $25 million in Square, and Starbucks chairman, president and CEO Howard Schultz will join Square’s board of directors.
“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,” says Schultz.
“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.”
From this fall, Starbucks customers will be able to use Pay with Square at participating US Starbucks locations – nearly 7,000 of them – as an alternative to the existing iPhone and Android apps. They’ll also be able to find nearby Starbucks locations within Square Directory.
More than two-thirds of the US’ 27 million small businesses don’t currently accept credit or debit cards, says Square, largely because of the expensive interchange fees associated with payment processing, cumbersome application processes and credit checks.
And, according to Jack Dorsey, Square’s co-founder and CEO, the Starbucks deal will have a knock-on effect for other businesses as more people sign up for the payment system.
“When Starbucks builds the Square Directory into their apps and in-store Digital Network, it gives Square new visibility, driving more customers to opt-in to Square,” he says.
“And with nearly 7,000 Starbucks stores soon accepting Square, these new payers will be able to find your business (including coffeehouses) and pay with their name, building community and creating value.”