Starbucks adopts Square wireless wallet

Coffee chain Starbucks will begin accepting payments through Square’s Wallet mobile app this fall, including the capability to digitally tip favorite baristas.

The move further legitimizes Square’s software-based mobile payment system, which is already accepted at several retailers including Best Buy, OfficeMax, Staples, AT&T, and Sprint. The announcement accompanied an update to Starbuck's iOS app that adds its loyalty card to the Passbook app in iOS6.

The Starbucks iOS app raises an alert anytime the device is within close proximity of a Starbucks. Opening the alert retrieves the digital version of the user's Starbucks Card. Apple picked Passbook for its mobile payment system in iOS over Near Field Communication (NFC) technology, which uses a wireless chip inside the phone to transmit payment information.

Square deal

Starbucks announced its partnership with Square back in August. At the time, Starbucks said it would replace its own credit card processing back end with Square's technology, and Starbucks invested $25 million in the company.

The extension of the deal will further reduce Starbucks’ credit card processing cost, and Square will likely get a boost in application installations given the coffee retailer’s extremely loyal customer base—a win-win situation for both.

“Starbucks and Square share a passion for constantly improving the customer experience,” Square founder and CEO Jack Dorsey says in a statement. “This partnership gives millions of Starbucks customers a quick, seamless payment experience and introduces them to hundreds of thousands of small businesses in the Square directory.”

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