The deal will not only bring Square into Starbucks, it will also bring Starbucks into Square. Starbucks is investing $25 million in Square as part of its latest round of funding, and Howard Schultz, Starbucks's chief executive, will also join Square's board.
"It's amazing to think that Starbucks began as a single coffee shop in Seattle. The concept of taking a good idea and helping it grow is not foreign to them, and Starbucks doesn't just view Square as the simplest way to accept payments.They see an opportunity to extend and accelerate a model they grew up with: the idea that business is local and that community plays a vital role in job creation and economic vitality, " Square CEO Jack Dorsey said in an announcement letter on Square's website.
"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. 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."
Square's card readers are currently used by a large number of merchants, ranging from coffee shops to food trucks and local merchants.
The company is now processing an astounding $5 billion in payments annually, increasing its payment volume by 25% since March of this year, with more than 1 million using the service to accept payments. Funds from sales made before 5 p.m. are available in the merchant's bank account the very next day - much quicker than the several days or weeks of processing required by other payment processors.
In March, the company took mobile payments a step further and launched Square Register. The full point-of-sale system for businesses allows merchants to accept payments, track store inventory and share information, such as their menu, with customers via Square's mobile app.
Customers can open a tab on their mobile phone wherever they want, or have a tab auto-open when they arrive at businesses they frequent. Merchants can then tap that person's photo and name on the checkout screen to charge a purchase.
Ultimately, Starbucks customers will be able to take advantage of that feature and charge purchases by simply saying their name when they reach the register, rather than forking over a credit card.
"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 in a statement. "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."
Starbucks currently offers in-store mobile payments via the company's mobile app and a virtual version of its Starbucks Card. Using the app; however, requires you to hold a balance on a Starbucks Card rather than simily debit your purchases from a credit or debit card.
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