Consumers approve of Starbucks’ mobile payment deal with Square

A Starbucks customer uses the Starbucks iPhone app to pay for a coffee at a store in Los Angeles. Starbucks announced a major deal with Square, which will take effect in the fall.
(Katie Falkenberg / For the Los Angeles Times)

The new deal between Starbucks and Square, in which 7,000 U.S. coffee shops will start using mobile payment systems this fall, has analysts and consumers alike positively giddy.

Patrons will use the start-up’s Pay with Square app, which allows transactions sans a physical credit card. Starbucks will also invest $25 million in Square. Our Tech Now blog has more details.

Analysts such as Jason Moser with Motley Fool are calling the arrangement “a terrific idea” that builds on Starbucks’ existing mobile payment app, which its clientele use for more than 1 million transactions a week.

The Square deal gives Starbucks “more freedom to cater the program toward their customer base while bringing transaction costs down,” Moser said.

Starbucks will not take advantage of the loyalty feature on Square's app, which some other merchants use. But eventually, the Starbucks app could be retooled so that it is powered by Square, according to Lisa Passe, a spokeswoman for the coffee giant.

The Seattle-based coffee chain has long been one of the most technologically forward companies in the food and beverage industry, according to Nick Setyan, an analyst with Wedbush Securities.

“They have the longest lines during peak periods and always want to convert transactions faster,” Setyan said. “If someone can swipe a mobile phone faster themselves than handing a credit card to a cashier for the cashier to swipe it and hand it back, then [Starbucks] loves it.” 

The deal also seemed to sit well with tech-savvy consumers. One Twitter user wrote that he was looking forward to ordering and paying for coffee “without waiting on enormous lines.” Another tweeted that she was excited about “cash becoming obsolete.”