The Square footprint got exponentially larger this week when Starbucks announced late yesterday that it will now start accepting Square payments across the nation later this year. In addition to this Square compatibility, the huge company also stated that it will invest $25 million in the startup as part of its fourth round of funding and president and CEO Howard Schultz will join Square’s board.
It looks like Starbucks sees its future in a paperless, careless world. While Square got its start in the concept that even business should be able to accept credit card transactions without confusing fee structures, expensive POS systems and long transaction payment cycles, the mobile payment service has grown to offer consumers the ability to create a Square account and even go careless. Now, Square users can set up their phone as a beacon and simply state their name to a cashier that looks for it on their device and confirms with picture verification. Simple, easy, no wallet necessary.
Also central in this deal is the new Square Directory which will list nearby Starbucks locations (and will alert Starbucks customers of Square-equipped businesses), and can even let customers know if there are specials for all customers or Square customers being offered at any time.
This San Francisco, Calif.-based company has already raised $141 million and is rumored to be gearing up a massive $200 million round, which would value it at more than $3 billion.
Square CEO and founder Jack Dorsey sent along the following e-mail to the company’s customers last night:
I am pleased and proud to announce that today Starbucks signed up for Square.
Square began with a really simple idea: everyone should be able to accept credit cards. It should be easy and free to get set up, it should use simple technology people already own, and, most importantly, it should instantly adapt to any size business—from the person chasing a dream to the largest organization on the planet. By embracing Square, Starbucks has validated these ideas as powerful tools—not just for small businesses, but for smart businesses.
It’s amazing to think that Starbucks began as a single coffee shop in Seattle. 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. They see an opportunity to extend and accelerate a model they grew up with: the idea that business is local and that community plays a vital role in job creation and economic vitality. When Starbucks builds the Square Directory into their apps and in-store Digital Network, it gives Square new visibility, driving more customers to opt-in to Square. And with nearly 7,000 Starbucks stores soon accepting Square, these new payers will be able to find your business (including coffeehouses) and pay with their name, building community and creating value.
Our customers make us who we are, and we are proud of every single one of you—including our newest. Our promise to you remains the same: build simple, affordable, and fast tools that level the playing field for everyone. Thank you for helping us build Square. And please share your thoughts and tweets; I’m listening.
So beginning this fall, nearly 7,000 Starbucks locations will use the service once relocated for small businesses and mobile vendors.
To date, Square has enabled more than 2 million merchants to accept credit card payments through a mobile device dongle and apps.
Last quarter the Seattle-based coffee company reported $3.3 billion in revenue and this June Square announced that the company is now processing $6 billion in annual sales -- that could mean the company would reel in toward $15 billion rather quick with just one customer add-on for the close of the year.
That gives Square a nice advantage over the dongle-come-latelies like Visa, MasterCard, QuickPay, mPowa and others that have entered the mobile payment service since Square broke the ground in 2009.
Electronic payment is a market that is growing fast, and many companies are trying to get into it early on. A report earlier this year found that a vast majority, around 65%, of experts agreed that Smartphone payments would be mainstream by the end of this decade. Square, one of the first mobile payment services, is reportedly about to announce a new fundraising round that should help it stay in front of the pack.