August 08, 2012

As Bank Systems & Technology reported this morning, payments tech company Square has now partnered with Starbucks to offer its card reader and mobile payments technologies at Starbucks locations nationwide. The deal is a big break for Square as it will give the company nationwide exposure through a large retailer that is popular with early tech adopters, as Quentin Hardy and Peter Lattman explain in the New York Times Business Day Live video here.

There seems to be a lot of interest from Square in leveraging GPS to spread their brand. Hardy notes how Square could use GPS as a payment method without the the need to swipe any instrument in the transaction. And users of the Starbucks mobile app will also be able to find other stores nearby that accept Square when the coffee maker adds the Square Directory to its app.

Where as PayPal has been penning agreements with many big retailers to accept its mobile wallet, Square is instead getting one big retailer on board and then - the thinking goes - other small businesses that are geographically close to that retailer's locations will be tempted to pick up the technology. Those small businesses will then become part of the Square Directory, hopefully drawing more customers from that Starbucks down the street to their doors. And then the technology spreads from there. Starbucks has already had a great deal of success with its own mobile app that allows customers to pay with their phones and use GPS to search for nearby locations. It will be interesting to see if the same strategy can be applied successfully to spreading mobile payments with Square.