Blog post

Square and Starbucks will move mobile U.S. payments

By Avivah Litan | August 08, 2012 | 3 Comments

I don’t get very excited by much news anymore but the Square/Starbucks announcement definitely got my adrenaline moving – even more than a couple shots of expresso.

Square finally found a large enough payment acceptor – Starbucks – to ensure its mobile wallet will be on millions of American coffee drinkers’ smartphones. After all it will be cool for Starbucks to recognize we are in the store, and all we have to do is give our name at the cash register for the payment to be processed.

Plus Starbucks will save considerable money in credit card processing fees using Square and together, these companies will eventually move many consumers over to prepaid accounts (Starbucks or others) and other alternative and less costly payment instruments, for example direct bank (ACH) payments.

This announcement is significant – we finally have a killer app for a mobile wallet and we finally have strong mobile payment competitors taking on the legacy credit card payment networks. Just what free market competition is supposed to encourage.

I’m personally very psyched.

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3 Comments

  • Gary Martin says:

    Are you sure Starbucks will save a considerable amount of money? I believe, due to their size and influence, Starbucks was already paying very close to cost; interchange, dues, and assessments. If so, then where well this savings come from? I’ve read others saying they will save also, but if they are at cost, or close to it, any savings realized would have to come from Square operating at a loss, which doesn’t make much financial sense.

  • Avivah Litan says:

    I don’t really know where the savings are coming from but I took the Starbuck’s CEO’s statement at face value – he said they would save considerable sums.

  • Richard Fouts says:

    Aviah … nice post. I’m looking forward to this new feature.

    BTW, do you have a Starbucks name? See my post

    https://blogs.gartner.com/richard-fouts/2012/08/10/why-you-need-a-starbucks-name/