Starbucks on Wednesday announced a new partnership with mobile payment company Square, a move that will expand cashless transaction options for the growing number of customers who use smartphones to pay for their daily lattes and cake pops.
Through the deal, Starbucks customers will be able to use Square’s payment application, called Pay With Square, at about 7,000 participating company-operated coffeehouse locations across the U.S. beginning this fall — in addition to Starbucks’ existing iPhone and Android mobile applications.
Described as a “quick and seamless” payment system, Pay With Square allows customers to pay simply by giving their names. To do this, customers must first download the Pay With Square application on an iPhone or Android device and create an account to which their name, photo and payment card is linked. At the checkout, the customer’s name and photo appear on the register for the cashier to confirm payment with the touch of a button.
Beyond processing mobile payments made through its app, Square will process all U.S. credit and debit card transactions for Starbucks, which is expected to reduce the Seattle-based chain’s payment processing costs.
Also under the deal, Starbucks will invest $25 million in Square as part of the company’s Series D financing round. Howard Schultz, Starbucks’ chair, president and chief executive, will join Square’s board.
“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 said in a statement. “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.”
Jack Dorsey, cofounder and chief executive of Square, said more than 2 million individuals and businesses use Square currently. The Starbucks partnership will significantly expand the mobile payment company’s scale and accelerate the benefit to businesses currently using the system, who will be linked to Starbucks customers.