Square Deal With Starbucks Could Be Huge For Mobile Payments In General

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As previously reported, Square and Starbucks have entered a major partnership, which will see 7,000 Starbucks locations start offering Square as a payment option. Customers will be able to pay at Starbucks using Square’s payer application, from participating stores in the U.S. later this fall.

Square will process Starbucks' U.S. credit and debit card transactions, which Square says will significantly expand its own scale and “accelerate the benefits to businesses on the Square platform, especially small businesses, while reducing Starbucks payment processing costs.”

It will be interesting to see if the deal leads to more major chains jumping on the Square bandwagon.

"It's certainly a good validation for Square that there's mainstream corp interest," Gartner analyst Michael Gartenberg tells WebProNews. "Landing a major chain is a big win."

While there are certainly a few, it's hard to imagine too many potential partners that could have the kind of impact on Square's future success that Starbucks could.

"It's not about one partner or another but making the service valuable in as many places as possible where consumers shop," says Gartenberg, who notes that if the fruits of the partnership take off, the number of stores where Square is available as a payment option will likely spread.

"We'll see, 7,000 is a good place to start," he says.

It will be really interesting to see what the partnership means for Square's competitors (not to mention Starbucks').

"Obviously [it] puts more pressure on others to do deals of significant size to gain traction and mindshare," says Gartenberg. "The real issue is the need to convince the consumers that this system is somehow better/easier/more valuable than just taking out the plastic card they already carry that's used EVERYWHERE and transition that function to their phones."

Starbucks does already accept PayPal.

In addition to getting Square into thousands of Starbucks locations, Square is also getting a hefty sum of money - $25 million - from Starbucks as part of a Series D round of financing. Starbucks Chairman, President and CEO Howard Schulz is also joining Square's Board of Directors.

Chris Crum
Chris Crum has been a part of the WebProNews team and the iEntry Network of B2B Publications since 2003. Follow Chris on Twitter, on StumbleUpon, on Pinterest and/or on Google: +Chris Crum.

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