Starbucks and Square Forge a Powerful Mobile Payments Partnership

Square partners with Starbucks

“If someone can swipe a mobile phone faster themselves than handing a credit card to a cashier for the cashier to swipe it and hand it back, then [Starbucks] loves it.” ~ Los Angeles Times.

Starbucks is injecting some caffeine into the world of mobile credit card processing, or is it the other way around? Rather than re-invent the wheel, Starbucks has teamed up with Square to start using mobile payment systems in nearly 7,000 U.S. coffee shops. While Starbucks already has its own app, Square has been revolutionizing the way phones can interact with credit cards.

This paves the way for cash less, card less, payments – which gives PayPal a run for its money (read NYT article on PayPal photo technology). Starbucks is not stopping there; it will also invest $25 million in Square to help push mobile transactions forward.
Wired Magazine said Starbucks made the decision after talking to a number of “blue-chip” companies providing mobile transactions, but Square won out because of an eye-opening demo that made it clear to Starbucks that this was a game-changer.

“Your phone, in your pocket, communicates electronically with the shopkeeper’s iPad, identifying you. All the shopkeeper does is match your photo with your face and tap O.K., and presto: you’ve paid.” ~ New York Times.

“Things will get really interesting later on when, as planned somewhere in the indeterminate future, Starbucks adopts the full “Pay with Square” technology (this may take a while, in that the Pay with Square technology is not yet perfect, and providing it at Starbucks scale is going to take a lot of care.),” said Wired.
“This GPS-based system identifies nearby participating merchants, allow you to check in and order before you arrive, and sends your payment info and your picture to the merchant’s register. When it’s time to pay, the cashier simply matches your face to the picture, and you walk out without having to touch any cash or plastic.”
Wired Magazine mentioned a future simulation of this technology might work for a Starbucks customer in the future:

You’re walking down the street. It’s hot. The Starbucks a block away sends you a message that your favorite hot-weather order – venti skinny latte on ice — is available to you at a dollar off. You accept the offer, and with a few taps, add an almond biscotti to the tab. Then you stroll into the Starbucks. Everything is ready when you arrive – you simply pick it up, the barista checks out your punim, and you’re out the door.

The technology described above will also find its way into other industry sectors, including, even, websites hosted on affordable shared hosting platforms. The recent Olympics confirmed an explosive growth in mobile content downloads that will eventually find its way into mobile credit card processing.