Starbucks Invests $25M in Square, Plans to Use Square in Stores

Starbucks Corp. announced today that it is investing $25 million in Square and will begin using Square’s mobile payment technology in its stores.

Square, a San Francisco company known for selling a small reader that allows smartphones to accept magnetic-stripe card payments, also makes a digital wallet called Pay with Square. In certain Starbucks stores this fall, customers will be able to use Pay with Square to make payments without a credit or debit card. 

As part of the agreement, Square will process U.S. credit and debit card transactions for Starbucks and Howard Schultz, Starbucks’ chairman, president and CEO, will join Square’s board.

Starbucks already supports a separate mobile payment system that relies on bar codes presented at the point of sale. This system speeds up lines by allowing consumers to reload their cards from within the app, eliminating the need to do so at the register. 

Starbucks said in its announcement that Square’s system is being deployed “in addition to” the existing mobile payment app, rather than as a replacement to it. In 2010, Starbucks also added eBay Inc.’s PayPal as a funding method for its app. 

“Both Starbucks and Square take a similar approach when building products and running our businesses, and together we can bring the best possible payment experience to Starbucks customers,” Schultz said in a press release.

Starbucks also plans to add the Square Directory, which helps consumers find merchants that use Square’s technology, to its mobile payment app.

Adding Square to the roughly 7,000 Starbucks stores will also boost Square’s network, the companies say.

“This partnership will accelerate our ability to provide [merchants] with the tools they need to grow their business and thrive in today’s economy,” said Jack Dorsey, Square’s co-founder and CEO, in the press release.