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Starbucks Customers Can Soon Pay With Their Phones

Starbucks Corporation(SEATTLE) -- Caffeine addicts and baristas who work during the frenetic morning rush can now rejoice. Starbucks has announced a partnership with mobile-payment platform Square that will soon allow customers to use Square’s payer app to expedite the process.

Customers will be able to use “Pay with Square” at participating company-operated Starbucks stores, about 7,000 in the United States, “later this fall,” the Seattle-based coffee retailer said.

The premise of Square, which Twitter co-founder Jack Dorsey launched in December 2009, is that “everyone should be able to accept credit cards,” Dorsey wrote in a letter announcing the partnership.

The deal includes a $25 million investment by Starbucks and Starbucks CEO Howard Schultz will join Square’s board of directors.

The company, headquartered in San Francisco, offers users a free app and free Square Card Reader to swipe credit and debit cards. Square takes a 2.75 percent cut per card swipe. Manually entered card numbers cost 3.5 percent plus 15 cents per transaction.

Starbucks fans will also be able to find nearby Starbucks locations and other local businesses within the Square Directory on their cellphones.

With the Square app, available for Apple and Android devices, customers link their credit card to their Square account. When they checkout at a store, their name and photo can appear on the register and a cashier confirms it’s you to complete the sale, according to the Square website.

If Starbucks’ millions of customers download Square and actually use it to pay for coffee, Square hopes more small businesses will sign up and accept Square payments.

“More than 2 million individuals and businesses can already use Square,” Dorsey said in a statement. “This partnership will accelerate our ability to provide them with the tools they need to grow their business and thrive in today’s economy.”

The two companies say more than two-thirds of the 27 million small businesses in the United States do not accept credit or debit cards, “in large part because of the expensive interchange fees associated with payment processing, cumbersome application process and required credit checks.”

“As an entrepreneur, I understand how critical it is for new businesses to have easy and affordable access to card processing while also giving customers a choice in how they pay," Schultz said. "Because Square’s revolutionary technology allows anyone to accept credit and debit cards, it gives entrepreneurs an essential tool to jump-start their business while providing existing small companies access to new customers.”

Copyright 2012 ABC News Radio

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