Starbucks will soon no longer take Square’s mobile payments in its stores, unwinding a key aspect of the partnership the companies announced in 2012.
On Wednesday, Square sent an email to some users of its Wallet app announcing that it was “retiring” Wallet. It’s now rolling a key feature of Wallet—one that let users check into a store and pay by announcing their name to a cashier—into its newer Square Order app. The new feature is called Tabs, but it works similarly to Wallet.
Just don’t expect to run up a tab on Square in Starbucks.
“Starbucks is not adopting Square Order in our stores,” says Maggie Jantzen, a spokesperson for Starbucks. “We opted to build our own mobile ordering solution, leveraging our own mobile app and world-class loyalty program.”
Starbucks is currently testing that app in its Portland, Ore., stores.
Wallet was also the payment method that Square offered in Starbucks stores. Instead of paying with their name, though, Wallet users had to use the app to pull up a scannable code. As such, Square Wallet wasn’t any more convenient than the existing Starbucks mobile app, and had the disadvantage of not letting users earn reward points for free coffee.
Square had already pulled Wallet from Google and Apple’s app stores earlier this year, but it had continued to support the app for people who had already installed it on their phones. That meant that Wallet users could still pay in Starbucks—if they wanted to.
When Square fully retires Wallet—it hasn’t set a date, but its emails to Wallet users suggest it’s coming soon—the existing app will stop working and Order will be the only option for paying with your mobile phone at Square merchants. And Square’s time as a mobile-payments provider to Starbucks will come to an end.
Hey Now, Hey Now, Don’t Dream It’s Over
Square doesn’t seem to want to declare the experiment over.
“Starbucks continues to be a partner of ours and we continue to process their payments and work closely together,” says Johnny Brackett, a Square spokesperson. “We have nothing to share regarding Starbucks offering Order.”
It’s true that Square and Starbucks will continue to do business together—just not in the area of mobile payments.
When customers pay with plastic credit or debit cards in Starbucks cafes, Square processes those transactions. It’s purely a back-end payment-processing deal: Starbucks doesn’t use Square’s custom card-swiping hardware. At the time, Starbucks said it would save money by switching from Bank of America Merchant Services to Square, which led many payment insiders to believe Square had agreed to financially disadvantageous terms to win Starbucks’s business.
Starbucks CEO Howard Schultz joined Square’s board in August 2012 and left it in October 2013. Since then, he’s announced that mobile payments is a key business for Starbucks, and the company is considering offering its system to other retailers—putting it in competition with Square.
Photo by calleephoto