Mobile payments innovator Square is getting a $25 million investment and a major contract from Starbucks (SBUX). Starbucks says it will start using Square to process all debit and credit card payments in the United States.
Square is best known for its card readers that attach to iOS and Android devices, effectively turning tablets or smartphones into cash registers. However, Starbucks will continue to use its existing cash registers and will use Square as its payment processor. Square says this will cut Starbucks’ credit card processing fees.
In addition, roughly 7,000 of Starbucks’ stores will accept payments made with Square’s mobile app that lets smartphone users swipe their phones to pay with a credit card. Customers will also be able to continue using Starbucks’ proprietary mobile app, which enables payment from a prepaid Starbucks account.
The $25 million that Square is getting from Starbucks represents its fourth round of financing. The company says that Starbucks CEO Howard Schultz will also join its board of directors.
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