Starbucks Bringing Square Payment Tech to Its Cafes

Starbucks will be abandoning its cash registers at its cafes in favor of adopting Square‘s payment technology, which connects a credit card reader to an iPhone, iPad, or Android smartphone or tablet to accept credit card payments. The payment technology has been adopted by many small businesses and it will soon be found in over 7,000 Starbucks locations this Fall.

The big name coffee store chain has not been a foreigner to mobile technology. It has been among the first major retailer to offer customers the ability to pay for its goods with an app for Android and iOS. With the Starbucks app, customers can add a Starbucks gift card and have a Starbucks associate scan their phones for payment information.

By adopting Square’s payment technology, hopefully Starbucks can lower its equipment costs and payment processing costs. The starting price for an iPad is $500 and a tablet takes up less counter space and is less obtrusive, lending to perhaps a better experience for customers as Starbucks employees behind the counter can interact with customers now with minimal barriers.

In the San Francisco Bay Area, I’ve seen Square’s technology adopted at various retail establishment, including restaurants, independent coffee shops, boutiques, and other shops.

Additionally, AT&T is considering implementing payment terminals based on the iPad.

Press release:

Starbucks Accelerates Mobile Payments Leadership by Choosing Square for Payments

Groundbreaking Partnership to Stimulate Small Business Growth

and Enhance Payment Experience for Millions of Customers

SEATTLE and SAN FRANCISCO, – August 8, 2012 – Starbucks Coffee Company (NASDAQ: SBUX), with its leading mobile payment platform, and Square, the company revolutionizing everyday transactions between buyers and sellers, announced a broad innovative partnership to bring the best possible payment experience to both sides of the Starbucks counter.

The partnership terms include:

Customers will be able to use Pay with Square, Square’s payer application, from participating company operated U.S. Starbucks stores later this fall, and find nearby Starbucks locations within Square Directory; Square will process Starbucks U.S. credit and debit card transactions, which will significantly expand Square’s scale and accelerate the benefits to businesses on the Square platform, especially small businesses, while reducing Starbucks payment processing costs;
Using Square Directory, Starbucks customers will be able to discover local Square businesses — from specialty retailers to crafts businesses — from within a variety of Starbucks digital platforms, including the Starbucks Digital Network and eventually the Starbucks mobile payment application; Starbucks will invest $25 million in Square as part of the company’s Series D financing round; Starbucks chairman, president and ceo Howard Schultz will join Square’s Board of Directors.

By accepting Pay with Square, Starbucks is giving millions of customers another way to enjoy a quick and seamless payment experience at approximately 7,000 Starbucks stores. The partnership will also accelerate the ability of small businesses to grow with Square’s innovative technology and a stronger and more widely available Square network.

“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.”

“We’re proud that Starbucks chose Square, as we share the value of always putting customers first,” said Jack Dorsey, co-founder and CEO of Square. “More than 2 million individuals and businesses can already use Square. This partnership will accelerate our ability to provide them with the tools they need to grow their business and thrive in today’s economy.”

Beginning this fall, in addition to the existing iPhone® and Android™ Starbucks mobile payment applications, Starbucks customers will be able to use Pay with Square to pay for their purchases at participating company operated Starbucks locations in the U.S. Customers simply need to download the Pay with Square application and set up an account on their iPhone® or Android™ device.

More than two-thirds of the 27 million small businesses in the U.S. currently do not accept credit or debit cards, in large part because of the expensive interchange fees associated with payment processing, cumbersome application process and required credit checks. Square enables merchants of any size – from sole proprietors to national retailers – to accept credit and debit cards.

“As an entrepreneur, I understand how critical it is for new businesses to have easy and affordable access to card processing while also giving customers a choice in how they pay,” Schultz continued. “Because Square’s revolutionary technology allows anyone to accept credit and debit cards, it gives entrepreneurs an essential tool to jump-start their business while providing existing small companies access to new customers. This development can play a vital role in spurring small business growth and hiring, which remains one of our country’s most important issues.”