Starbucks and Square aren't breaking up

Steven Loeb · December 22, 2014 · Short URL:

Square will still process Starbucks payments, but customers can no longer pay with a Square app

It was in August of 2012 that Starbucks and Square entered into a partnership to accept Square payment in 7,000 locations around the United States. The agreement was so important that we at Vator called it nothing short of a "big damn deal" because of the impact it would have on the digital wallet. And have an impact it most certainly did!

Now reports, from sources such as ReadWrite and The Wall Street Journal, are reporting that the two companies are now parting ways.

So is this truly the end of their relationship? Not so, at least according to what Johnny Brackett, Product Communications Manager at Square, told me. Essentially, the two companies are remaining as partners on the back end.

"Square and Starbucks still remain partners. We will still be processing payments at 7,000 locations," he said.

The only split between the Square and Starbucks is occuring on the front end, as customers will no longer be able to use a Square app to pay for goods in store. That is because Square has decided to discontinue its Wallet app next year, so that the company can instead put focus on Square Order, an app launched in May that allows users to order food in advance from cafes and restaurants and then pick them up without having to wait in line.

Starbucks, which has been allowing customers to pay with Wallet for the last two years, has decided it will not be accepting the new app. Instead, the coffee chain has already been testing out its own app to let users pre-order drinks, which it launched in Portland back in October. The two companies will now each have their own pre-ordering apps.

"Starbucks is not adopting Square Order in our stores,” Maggie Jantzen, a spokesperson for Starbucks, told VatorNews. "We opted to build our own mobile ordering solution, leveraging our own mobile app and world-class loyalty program."

Starbucks and technology

Starbucks has been a champion of technology for years, so it's also not surprising that it would launch its own app to compete with Square Order. After all, this is the company that rolled out its own mobile payments system back in 2011, which allowed customers to pay directly with their smartphones.

The company has also been offering free WiFi in its stores nationwide since 2010. It has even started using the Internet of Things to better stock its stores, using Clover coffee-brewing machines which are connected to the cloud and allow stores to not only track customer preferences, but for recipes to be digitally updated and to allow employees to monitor how a coffee maker is performing.

In a move similar to this latest announcement, the company also recently began allowing customers to tip their barista right from their phone. 

Would it really shock anyone if Starbucks eventually developed its own payments system as well, meaning it could drop Square completely?

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