Starbucks sinks $25 million into Square
US-based mobile payment app Square has partnered with coffee chain giant Starbucks, which will invest $25 million in the start-up as well as use its platform to process debit and credit card transactions in-store.
Square, founded in 2009 by former Twitter chief Jack Dorsey, enables consumers and businesses to accept credit card payments on mobile devices.
Last year, British entrepreneur Sir Richard Branson invested an undisclosed sum in Square following a $110 million funding round.
Branson commended Square on its “rapid growth and novel technology, in particular its free hardware that allows anyone to accept credit card payments”.
Now Square has caught the attention of Starbucks, which will sink $25 million into the start-up as part of a new partnership to enhance the payment experience for Starbucks customers.
Customers will be able to use Square’s payer application from participating company-operated US Starbucks stores later this year, and find nearby Starbucks locations within Square Directory.
Square will process Starbucks’ US credit and debit card transactions, which will significantly expand Square’s scale, while reducing Starbucks’ payment processing costs.
Using Square Directory, Starbucks customers will also be able to find local Square businesses from within a variety of Starbucks digital platforms, including the Starbucks Digital Network.
In addition, Howard Schultz – chairman, president and chief executive of Starbucks – will join Square’s board of directors.
Schultz said in a statement that Starbucks is “excited and proud” to partner with Square.
“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,” he said.
“Starbucks and Square take a similar approach when building products… and together we can bring the best possible payment experience to Starbucks’ customers.”
According to Dorsey, the partnership will “accelerate our ability to provide them with the tools they need to grow their business and thrive in today’s economy”.
In a letter posted on the Square website, Dorsey said Square began with a really simple idea – that everyone should be able to accept credit cards.
“It should be easy and free to set up, it should use simple technology people already own and, most importantly, it should instantly adapt to any size business,” Dorsey wrote.
“By embracing Square, Starbucks has validated these ideas as powerful tools.”
Dorsey said it’s “amazing” to think Starbucks began as a single coffee shop in Seattle, highlighting its origins as a start-up.
“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,” he wrote.
“They see an opportunity to extend and accelerate a model they grew up with: the idea that business is local.”