2012
08.10

Has the era of paying with your phone finally arrived? I’m not sure, but when a retail behemoth like Starbucks jumps on board, it’s a sign the times are changing. With its nearly ubiquitous presence in American life, Starbucks represents familiarity to many people, and its foray into mobile payments will bring the technology to a larger audience.

Starbucks will partner with Square to provide its mobile payment platform in stores. Starting this fall, customers will be able to use Pay with Square, a mobile app, to pay for purchases. Right now, Starbucks says the service will be available at participating company-operated U.S. stores.

If you don’t know how it works, Square’s app can be downloaded onto a smartphone, and then you link your credit card to the system. You can also set the app to open a tab automatically when you enter your favorite spots. At checkout, the cashier sees your name and photo appear on the register.

Square says it will process Starbuck’s U.S. credit and debit card transactions, which will significantly expand its scale. Overall, this is a major win for Square. Not only is the company getting a ton of exposure at all those Starbucks, it’s also gaining lots of new business.

Starbucks seems quite interested in Square as well. It was also announced that Starbucks will invest $25 million in Square, and Howard Schultz, Starbucks chairman, president, and CEO, will join Square’s board of directors.

So Starbucks and Square are looking pretty cozy. Personally, I look forward to being able to pay with my phone at Starbucks and at other locations. It seems I never have cash, and pulling out a credit card for every $4 transaction feels a little cumbersome. Keeping my card safely stowed in my wallet also keeps prying eyes from potentially reading the numbers.

But Square isn’t the only company that wants to change the way you pay. Google Wallet is using NFC (near-field communication) for its mobile payment app. And Dwolla uses your phone to move money from your bank account through its mobile payment network to the merchant, no credit card required.

But the partnership with Starbucks certainly seems to give Square a leg up. As we have seen, getting there first is important.

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