Last week, Square’s Starbucks deal was confirmed when the coffee brand invested $25 million into the start-up business.
For those unfamiliar with Square, it’s a credit and debit card reading device that attaches to cell phones. Square’s business model collects 2.75 percent of each mobile transaction. According to the article, “Will Square’s Starbucks Deal Spark the End of Cash?” by Peter Cohan, Square is now valued at $3.2 billion and will soon be processing payments at 7,000 Starbucks locations across the United States. With the boost from the Starbucks deal, Cohen suggests that this may be the beginning of the end of cash as we know it.
Mobile payments aren’t anything new for Starbucks and their customers. “Since 2011, Starbucks has been processing more than one million mobile payments a week.” Eliminating cash has made processing payments more efficient for customers and businesses.
However, not all large businesses have been quick to use Square’s services. Square’s biggest customers are small businesses who want to avoid large fees from credit card companies. With Starbucks’ investment, more large corporations could invest in Square which would dramatically reduce the number of people who use cash. It will be interesting to see the effects on cash usage as large retailers or grocery stores begin introducing mobile payments.
Read an excerpt from the article.
Square has more than two million users of its small square credit and debit card reader that attaches to a cell phone. Square charges a fee of 2.75% of the transaction cost — it keeps some of that and passes the rest to the credit card company. And starting in the fall, Square will begin processing all credit and debit card transactions at 7,000 U.S. Starbucks stores.
But that is not the most exciting part. Square and Starbucks will eventually introduce a service that lets you pay by mentioning your name to the cashier. Square’s technology will signal through your cell phone that you’ve entered the store. The cashier will have access to your photo and name. When you mention your name, the cashier will approve your payment, reports the New York Times.