Does Starbucks Partnership With Square Pose A Security Risk? [UPDATED]

Does Starbucks Partnership With Square Pose A Security Risk? [UPDATED]

Starbucks Corporation (NASDAQ:SBUX) announced plans to invest $25 million in Square Inc., a company which would provide Starbucks the ability to allow consumers to pay for their purchases using their smartphone.

Starbucks Corporation (NASDAQ:SBUX) already has their own app, which allows customers to pay for their purchases using their Starbucks rewards card, but this new partnership with Square Inc. would allow them to use personal credit and debit cards to pay for their coffee.

This seems like an amazing advance in technology for the company, but does it pose some possible risk for consumers? Paul Vigna, of the WSJ, reports that users may be identified by simply using their phone, which would allow them to set up and run a “tab” of sorts with Square Inc. The upside is that customers wouldn’t have to have their credit card in hand to make a purchase, however, the very obvious downside is the fact that it could be possible for someone, who managed to swipe a customers phone, to be able to impersonate the customer at the counter and run up charges on their bill.

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The investment partnership, which Visa Inc. (NYSE:V) has entered into with Square Inc. has helped to allay some of these fears. However, the risk still seems apparent to me. If I have an account with Square Inc. (which I don’t) and I use it at Starbucks Corporation (NASDAQ:SBUX) (which I would if I had one), then it could be possible for someone to walk into the store and use that account, simply because they know my phone number and have managed to steal my phone. I am not sure that I am personally ready to take that risk, having been the victim of identity theft once before. While I can see the benefits of being able to move through the line a little quicker, I do not believe I would risk my life savings being spent on someone’s coffee habit, unless, perhaps, it is mine.


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