Starbucks, Square Team Up for Mobile Payments

Mobile device payment company Square announced on Wednesday that it struck a deal with Starbucks to handle the coffee shop’s credit card transactions. As part of the agreement, Starbucks will invest US$25 million in Square.

Starbucks: It's Hip to be SquareStarbucks: It’s Hip to be Square

Along with processing credit and debit card transactions, “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,” the company said.

The deal will bring Square into 7,000 Starbucks locations, and will also add Starbucks CEO Howard Schultz to Square’s Board of Directors.

Starbucks already has its own iPhone app that links to customer’s gift cards and lets them pay by scanning an in-app barcode, so expanding to include Square’s payment system won’t be a big jump for the coffee shop chain. The deal may make Starbucks investors happy, too, since Square’s transaction fees for credit cards may be more competitive than what Starbucks is currently paying.

Square’s payment system will roll out in Starbucks locations some time this fall.