Square Payments Go Live In 7,000 Starbucks Locations

Starbucks (Nasdaq: SBUX) is now officially accepting mobile payments through Square, the rising star of Silicon Valley startup culture led by Twitter co-founder and recent media darling Jack Dorsey.

The new service, which allows users to pay for coffee or any other Starbucks product simply by pressing a few virtual buttons on their smartphone, is rolling out at about 7,000 stores across the U.S. on Thursday -- the first step in a far-reaching agreement between the two companies that was first announced in August.

When the deal was first announced, Starbucks said that it planned to invest $25 million in the two-year-old startup, giving it a significant stake in the young company that is already valued at $3.25 billion. Starbucks’ CEO Howard Schultz joined the private company’s board in the deal as well.

The new Square services actually gives customers two different wallet-less ways to pay for items. In addition to Square’s smartphone app that gives users a mobile wallet to make purchases by either scanning a QR code or tapping a “pay here” button, Starbucks also has its own branded app. The main difference between the two is their degree of retail specificity -- the Starbucks app also functions as a rewards card that might benefit repeat customers, but it can’t be applied to other merchants as the native Square app can.

“We look forward to continuing to create amazing connections with our customers -- both in our stores and outside of our stores and offering our customers choices in how they want to pay,” said Adam Brotman, Starbucks chief digital officer, in a statement. “Starbucks was the first national retailer to offer its own mobile payment technology combined with a world-class loyalty program in January 2011, and we have seen a tremendous response from our customers with more than 100 million mobile transactions occurring in our U.S. stores since its launch.”

The new partnership also sets a potential precedent for merchants, and restaurants in particular, to begin integrating mobile payment services more deeply into their point-of-sale systems as well as the general management of a given store’s inventory and financial activity. Other e-commerce startups such as Groupon are pinning their hopes on a similar desire from small businesses to help streamline all of their customer transactions and internal organization alike.

Last month, Square took its first steps into an international audience by entering Canada shortly after Dorsey revealed that he had stepped down from an operational role at Twitter to focus solely on his new company.

“Starbucks believes in the values and vision of Square, and just three months after announcing our partnership with Square, we are thrilled to make the convenience of paying with the Square Wallet app available to our customers starting today,” Brotman added.

As mobile payment systems are fast becoming an increasingly competitive field, the new partnership gives Square a much-needed brand-name association. The addition of a high-profile retail figure like Starbucks (which is the world’s largest coffeehouse chain, after all) has helped launched Square from a sort of indie favorite of the Silicon Valley startup scene into the mainstream of tech business stardom. Since the partnership was first announced, Dorsey has been profiled in everything from tech magazines like Wired to leading business publications like Forbes and The Wall Street Journal Magazine -- appearing on the cover of the former and winning the “innovator of the year” award from the latter.