Receiving Wide Coverage ...
Squarebucks: One small step for Square may turn out to be a giant step for mobile payments. The start-up has struck a mega-partnership with popular coffee chain Starbucks that could very easily revolutionize the payment space. Starting this fall, Starbucks will begin processing all of its debit and credit card transactions in the U.S. using Square technology. The deal also comes with a $25 million investment that places Starbucks CEO Howard Shultz on Square's board.
During the partnership's initial roll-out, customers will still have to pay for their food and drink at the register since Square technology is being fully integrated into Starbucks' existing payments platform. They can use the free Pay with Square smartphone app to make a purchase, but will need to show a Starbucks employee a bar code at the register. Tech experts speculate, over time, the partnership could enable purchases anywhere in a Starbucks (similar to how the Apple store currently does its business) or even allow customers to pre-order and pay for drinks while within walking distance from a store. Shultz wouldn't formally comment on other ways in which Square's fancier components could be put to good use, but he did tell Wired his chain "will be opportunistic."
Even without the technological bells and whistles, the deal is a definitely game-changer since it illustrates how innovative start-ups can threaten existing industry strongholds. According to the Journal’s All Things D blog, Starbucks will be lowering its payment processing costs, and shares of the terminal maker Verifone tumbled on the announcement. Should Square’s integration at Starbucks prove seamless, entrenched players, which have already seen their swipe fee structures hotly contested (and detested) by retailers, will have to deal with the serious possibility other merchants will take their business elsewhere.
Obligatory StanChart Update: Standard Chartered isn't taking possible rogue regulator Benjamin Lawsky's allegations of Iranian money-laundering lightly. The FT reports the British bank is considering filing a countersuit against U.S. regulators as some of its legal advisers believe "there is a case" for claiming reputational damage. Meanwhile, the Journal says U.K. banking officials have come to StanChart's defense, asserting that the move by New York regulators to revoke the bank's state license are based on a "factually inaccurate" assessment.
Wall Street Journal
Knight Capital Group's brush with death via rogue computer was actually closer than originally suspected. At one point during its now infamous software glitch, the brokerage firm actually held about $7 billion of stocks. Traders were able to get the figure down to about $4.6 billion by the end of the trading day. The malfunction ultimately caused the firm $440 million in losses.
Morgan Stanley isn't being dissuaded by Knight's technological problems. The company is moving to replace some of its "well-paid" bond traders with computers ahead of Dodd-Frank regulations that are expected to push derivatives trading onto electronic platforms.
What? Ummm - no. Please explain/elaborate on this sweeping statement.
Square has a value proposition for small merchants - they don't have to sign up individually and pass credit checks to obtain credit card processing. For that privilege, they pay a PREMIUM. Square simply aggregates small merchants under its own merchant account (which wasn't allowed by VISA until VISA made an investment in Square).
As for Starbucks, THERE IS NO WAY they are now paying 2.75% in processing fees to Square. They weren't paying anywhere near that before this deal. Not even close.