Starbucks To Invest $25 Million In Square Inc.’s Mobile Payment


Starbucks Corporation (NASDAQ:SBUX), the largest coffee-shop chain, will invest $25 million in Square Inc.’s Mobile payment system to roll out the technology in 7,000 stores. This will allow its customers to easily pay their bills using mobile phones.

According to BusinessWeek, the deal will see Starbucks Corporation (NASDAQ:SBUX) Chief Executive Officer, Howard Schultz, join Square Inc.’s board, a company started by Twitter Inc. co-founder Jack Dorsey in 2009.

Square’s software allows merchant users accept electronic payments on their own hardware, or via various devices that can plug into phones or tablets. Ideally, Starbucks will be merging its mobile phone payment program with Square Inc.’s transaction processing tools, notes the report.

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A reliable source, with regard to the matter, is quoted, saying that the $25 million is part of the $200 million funding received by the San Francisco based Square Inc., which now bring the total value of the software provider to $3.25 billion.

Schultz is quoted in an interview speaking about mobile technology and tech companies monetization strategies, where he said, “Every tech company is trying to crack the code and chase down how to monetize their business in regard to mobile and mobile payments.”

He then adds to elaborate the Starbucks’ desire to tap on the mobile platform saying, “It’s the fastest-growing opportunity we’ve ever seen in terms of customer acceptance.”

 This is not the first time the company will be using mobile a payment system, Starbucks has its own mobile payment application, which it has been using to process more than 1 million mobile purchases week after week. The company’s smart phone  app has, since its launch, has processed more than 60 million transactions.

Last year, Starbucks expanded its mobile payment program in the U.S., after it launched the app in Google Inc. (NASDAQ:GOOG)’s Android software. The app is also available in Apple Inc. (NASDAQ:AAPL)’s iOS, accessible from iPhone devices, and allows users of the devices to buy coffee and other products from the giant chain, with a Starbucks card, by scanning a barcode on the screen of the phone, notes BusinessWeek.

Square Inc. will use the same process, where users will scan the card on the screens of their Smart phones, but this time around, it will be Square processing the payments at a flat rate of $2.75 percent for each credit card transaction processed.

In an interview regarding the investment, Square Inc. CEO, Jack Dorsey is quoted saying, “We’ve always built the company and the technology around the idea of it being used by an individual, all the way up to the largest organization in the world.”

Meanwhile, Juniper Research Ltd projected the mobile payment market could easily exceed $170 billion within the next three years, as compared to last year’s $60 billion.

Square Inc. currently processes over $6 billion in mobile transactions per year, while Ebay Inc. (NASDAQ:EBAY) and PayPal are projecting mobile payments projected to hit $10 billion this year.

Mobile technology seems to be getting the odds now, and in the future, and companies are innovatively strategizing to keep up with the rapid shift in consumer behavior.

Starbucks Corporation (NASDAQ:SBUX) was trading at $45.15 per share, down $0.13 or 0.34% at the time of this writing.

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