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Jack Dorsey: Today Starbucks Signed up for Square
- barrynolan 14y agoIt's a great validation of developing and iterating the business initially with the small 'mom & pop' business to the point where traction allows you capture the really massive customers.
- jcdavis 14y agoWow, huge deal for Square. I'm very curious what the terms of the deal are: presumably Starbucks isn't willing to pay much more than what their current processing fees are (maybe a tiny bit more for the premium of being able to use Pay with Square?), so Square must be losing a decent chunk of change in exchange for the huge marketing and growth this gets them.
- joelrunyon 14y agoThey mentioned the investment as part of a series D financing. I'm assuming any tradeoff in per/transaction costs is going to be more than made up in the scale and regular usage that Square is going to get from this partnership.
- pitdesi 14y agoStarbucks will be saving money at Square's 2.75% rate - it is cheaper than interchange at below $15 transaction size. See: http://www.quora.com/Square-Inc-1/Can-Square-make-money-with-its-new-pricing http://www.quora.com/Square-Inc-1/Can-Square-make-money-with...
- riams 14y agoLosing a decent chunk of change? How can they lose something they wouldn't otherwise have had at all? It's only normal to assume that they have special terms for Starbucks, but it doesn't mean they're losing anything. Unless you mean that Square is providing the service at a loss to Starbucks?
- jcdavis 14y agoYes, I would guess they are providing this service at a (slight) loss to Starbucks.
- philip1209 14y ago"Starbucks isn't willing to pay much more than what their current processing fees" Let us not forget that there may be a dichotomy in processing fees of credit cards at Starbucks between register-based transactions and digital/mobile-based Starbucks card reloads. Square doesn't have to beat the former to be competitive - only the latter, because it seems that Square will be on track to replace the current smartphone scanners at Starbucks registers. Let us also not ignore that this is Starbucks offloading liability - when dealing with payments on a massive scale, one has to deal with a variety of frauds that may occur. With the current Starbucks card reloads before the point of sale, they may be starting to encounter fraud based on the volume of sales they encounter. However, Square has essentially specialized in managing this type of fraud. Hence, the Square partnership could simply be an acknowledgement that the Starbucks card payment system has become mainstream enough that it justifies a dedicated security division, whether it be internal or external, and that Starbucks opted for external Square.
- lincolnq 14y agoI have heard that Pay With Square causes people to spend more money.
- salman89 14y agoAnecdotal, but at a sandwich shop the other day, I tipped $1 when the cashier handed the iPad to me. Not sure if I would have done the same when signing a regular receipt.
- daveying99 14y agoWith billions in revenue per year, Starbucks has direct advantageous deals with credit card companies that probably follow them no matter what transaction system they use including Square. In other words, they are likely to pay less than the standard Square fees.
- ry0ohki 14y agoStarbucks is very good at staying on the cutting edge. They were one of the first to offer FourSquare specials, iTunes credits, and they seem to partner with just about any semi-relevant startup out there.
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- joering2 14y agoCan someone explain me what it means for customers? As far as NYC goes, each Starbucks accepts Visa, Master Card, Discovery and American Express (the card that plenty businesses hate). So what is the benefit for the customers?
- salman89 14y agohttps://squareup.com/pay-with-square https://squareup.com/pay-with-square Smart phone based wallet, a la Google Wallet.
- deleted 14y ago[deleted]
- ben1040 14y agoOne cool feature about the Square mobile app is you can set up geofenced "tabs" that automatically get opened if you get close enough to an establishment. So you keep your phone in your pocket, walk into Starbucks and order a drink as you do every morning. You tell them "put it on John's tab." You get a receipt in your email immediately thereafter, and never have to pull out your phone or wallet.
- euroclydon 14y agoDoesn't this now or won't it eventually dismiss with the credit card portion all together thus making the margin available to Square?
- ben1040 14y agoRight now it just settles the charge to whatever credit card you have on file with Square. Maybe eventually Square will let you link it to a bank account or prepaid account and they'll keep the spread.
- mapster 14y agoI always look at my receipt upon purchase, even for a $7 latte and scone. This may require a leap of faith beyond most people's comfort zone, at least initially. But very promising.
- salman89 14y agoI think more than any other benefit, Square has been validated by a premier American chain. It will be a much easier sell to other large chains. The big money for Square is in having these large customers with multiple POS deployments, where overhead will be small compared to revenues, at least relative to single shop customers. It will also put their product in front of end customers, many for the first time. I for one have heard/read about Square since they first started shipping readers, but had not actually seen the product in action till last weekend (live in Silicon Valley).
- notatoad 14y agoYeah, with this announcement square's sales pitch has effectively become "well, starbucks uses it..."
- pnathan 14y agoenterprises run on "some other big company uses it". This is a major coup for Square. I've said it before, I'll say it again: I look forward to the IPO. Square has value.
- pbreit 14y agoInteresting. Starbucks is obviously not going to use the error-prone dongles. I suspect Square will provide some sort of custom "Pay With Square" solution, perhaps tied into Starbucks' existing point-of-sale system. Any way you look at it, it's a huge deal for Square, Starbucks is absolutely the best venue for Square and likely the key building block to really push out a new checkout experience such as "Pay With Square".
- spullara 14y agoPay with square app doesn't use the dongle at all.
- faramarz 14y agoThis announcement makes me happy, for Square and Jack Dorsey as a young business leader. I love everything about the business idea, execution, design and tone of the overall strategy. Noteworthy points from the press release The partnership terms include: - Customers will be able to use Pay with Square, Square’s payer application, from participating company operated U.S. Starbucks stores later this fall, and find nearby Starbucks locations within Square Directory; -Square will process Starbucks U.S. credit and debit card transactions, which will significantly expand Square’s scale and accelerate the benefits to businesses on the Square platform, especially small businesses, while reducing Starbucks payment processing costs; - Using Square Directory, Starbucks customers will be able to discover local Square businesses -- from specialty retailers to crafts businesses -- from within a variety of Starbucks digital platforms, including the Starbucks Digital Network and eventually the Starbucks mobile payment application; - Starbucks will invest $25 million in Square as part of the company’s Series D financing round; - Starbucks chairman, president and ceo Howard Schultz will join Square’s Board of Directors. https://squareup.com//news/releases/2012/square-starbucks https://squareup.com//news/releases/2012/square-starbucks
- philip1209 14y agoAlso, this is a big win for Jim McKelvey. (disclosure: I am a WashU student and Cultivation Capital intern)
- jevinskie 14y ago"Square will process Starbucks U.S. credit and debit card transactions": Wikipedia says that Starbucks has $11.7 billion in revenue every year. I would assume that a majority of that revenue is through a card. I am not familiar with Square's revenue but I feel that this will at least double their transactions. Am I correct?
- deleted 14y ago[deleted]
- bigiain 14y ago"I would assume that a majority of that revenue is through a card." Really? I almost never use a card for café type purchases. Maybe if I were buying a meal, but for a coffee or two I'm 99% likely to use cash. (Note: mine is an Australia-centric view, perhaps things really are very different in the USA?)
- akent 14y agoJack's signature is "@jack"? Nice.
- deleted 14y ago[deleted]
- NHQ 14y agoThe announcement aside (line 1 of 20), this "letter" is some poor PR spew. Jack, if you're listening, you need a personal letter stylist. Letters are like jeans that people read.
- fredsanford 14y agoIs this yet another middle man to suck fees out of the system? I have not kept up with Square but despise the though of yet another fee leech that is compiling a list of my purchases to sell to annoying advertising companies. /shoutAtClouds
- dm8 14y ago> yet another fee leech that is compiling a list of my purchases to sell to annoying advertising companies. Square's business model is transactional. It's not advertising based!
- fredsanford 14y agoRead closer. "compiling a list of my purchases" Visa, Amex, Discover, Mastercard... All do this and are transactional. "to sell to annoying advertising companies" And this.
- dredmorbius 14y agoHoly grey-on-grey readability disaster, Batman! And shouldn't 140 characters have been enough?
- dm8 14y agoSkeuomorphism can be horrible if it's not done properly!
- ronaldj 14y agoAll the cool kids are talking about skeuomorphic design lately.
- dm8 14y agoCouple of years back, it was all about "modernism".
- dredmorbius 14y agoModern ain't what it used to be.
- snowwrestler 14y agoIt's a technical-sounding word that makes the speaker look smart when they are complaining about design.
- duaneb 14y agoActually, horrible is pretty much the default.
- fredsters_s 14y agoDesigners in the house! I literally could not absorb the content of the 'letter' because the design hurt my eyes so.
- armandososa 14y ago
- medinismo 14y agoI really do not see the benefit of this deal. Square - sure, another bunch of retailers. Starbux, not so much. NFC will take over and then square is out. can someone explain?
- cdcarter 14y agoNFC hasn't taken over yet. Pay with Square offers something pretty close feature-wise, and is establishing residence in the market. Once NFC works well, Square can adopt it and rule.
- gojomo 14y agoThere is also the chance that Square (and similar geolocation- and photo- based heuristics) will make NFC superfluous. Why NFC when a human-to-human word or gesture is faster, more natural, and just as reliable?
- nasmorn 14y agoBecause eventually they will want to get rid of as many humans as they can in your caffe latte experience. Or more prosaicly so that you can order a snack from a snack machine too.
- gojomo 14y agoIf automated vending machines are the remaining hope for NFC, that's pretty weak. A geofenced app -- if not Square, then Apple Passbook or others -- could prompt me on my own device's screen: "The vending machine here requests $1.50 to dispense your Snickers. Press 'pay $1.50' or 'cancel'." The soft-interface device screen is much more flexible than the NFC-tap/wave-in-the-right-place gesture. Your own device screen will be better for doing things like: • pre-authorizing a purchase before buying a tank of gas • requesting an emailed receipt • offering immediate feedback (or adding a tip) • avoiding possible confusion/chargebacks about amounts paid. That could mean 'app-style' payments have not just usability benefits, but also cost and legal benefits over 'NFC-style'.
- deleted 14y ago[deleted]
- bootload 14y ago"... I am pleased and proud to announce that today Starbucks signed up for Square ..." Starbucks has a history of taking risks with startups ~ https://en.wikipedia.org/wiki/Kozmo.com https://en.wikipedia.org/wiki/Kozmo.com
- philip1209 14y agoHowever, here I feel that Square enhances the Starbucks core value of creating an intimate coffee experience. # With Square: "I am Jack and I would like [. . . ]" (clicks name with face on screen to charge; receipt emailed automatically) "Ok, Jack, your total was [. . .] and here it is" # Current Method: "I would like [. . .]" "Ok, your total comes to [. . .]" [exchanges credit card] "Would you like your receipt?" "No, thanks" "What name would you like on the order?" (while holding credit card with name on it - hence this step is meant to increase intimacy) "Jack" "Ok, here is your drink" -- The Square system makes transactions shorter and simpler, and it humanizes the experience
- jordo37 14y agoAwesome news for square. I am very eager to see how this changes the natures of: 1) The Starbucks App - will square replace it outright or will there be an option to use starbucks or square? 2) Paying with a card at starbucks - same registers or new registers with square dongles? Hopefully its a better dongle if so... PS - Anyone noticed how they seemed to be stepping around the idea of those local businesses being other coffee shops? Craft businesses in the Press Release...like craft coffee shops?
- jarek 14y agoAndroid Starbucks app "card" payment was just rolled out to Canada and the UK last month - I doubt it'll go anywhere for a while for these locales. It might be interesting to see if any payment technology roll-outs beyond US/UK/Canada go with Starbucks-powered stuff or Square stuff. I'm guessing Starbucks for now.
- FixThisPOS 14y agoWhy use a mobile payment-processing system in brick-and-mortar stores that are already wired with point-of-sale systems?
- msantos 14y agoThis entry is duplicated First entry is in http://news.ycombinator.com/item?id=4353817 http://news.ycombinator.com/item?id=4353817
- chollida1 14y agoIs this just for Starbucks US stores or is it for all of North America? If it's just for US stores then the title should probably be amended. Being a Canadian, I've never seen a merchant using a square device.
- abalone 14y agoHere's what's in it for Starbucks: Square's cheaper. Square loses money on transactions below $6. The reason is for the sake of simplicity they waive the per-transaction fee that Visa/Mastercard charges them and just charge a flat percentage of 2.75%. But even though this is a relatively high percentage, it's not enough to recoup the cost of the per-transaction fee at low transaction sizes. Take a $2 coffee charged to a Visa credit card. Visa charges Square 1.76% + 6 cents, or 9.5 cents. But at 2.75% Square only collects 5.5 cents. So even if Starbucks was already paying wholesale Visa/Mastercard rates, they'll save 4 cents or more a cup thanks to Square's "simplicity subsidy". Now multiply that by a few billion cups. Starbucks saves millions, and Square is happy to pay it to drive their growth into the stratosphere. Source: http://feefighters.com/blog/can-square-make-money-with-its-new-pricing/ http://feefighters.com/blog/can-square-make-money-with-its-n...
- jusben1369 14y agoI would point out that it's unlikely SB's received the same financial terms offered to Mom and Pop vendors who sign up via the website.
- abalone 14y agoMaybe, but they wouldn't need to for the deal to be attractive. Square's regular rate is already below wholesale processing for small transactions.
- jusben1369 14y agoThe largest retailers though can negotiate less than wholesale. But you raise a point. What attracted SB's to the deal? Lower transaction fees or incremental sales due to a simplified paying process? It can be both but it's probably not 50/50. I suspect one was the driver and the other gravy.
- archangelzx 14y agoI'm sure part of it deals with space as well. Their registers take up a large portion of their counters. Also with a portable register they could move down the line much faster (akin to the order-takers who walk down the line at in-n-out.)
- jusben1369 14y agoThe initial advantage Square had was “green fields” Most of their customers didn’t accept Credit Cards so they did not have incumbency issues. That’s what makes this win impressive. However, it also highlights just what Square has to go through to win a very large account. SB’s had to agree to tear out and replace their existing POS system. That’s a big risk, headache and cost and customers will use that leverage (and genuine pain) to drive hard bargains. Also worth noting is that SB’s mentions processing costs will be cheaper. It’s hard for me to imagine that SB was overpaying with their last vendor so I worry about the economics on this deal. Maybe it’s the anchor tenant though that allows for additional enterprise deals to follow so is worth it. I can imagine other large retail organizations that had any interest were on the sidelines saying "It's one thing to service 10,000 food trucks but come on!" They'll stand up and listen now with this.
- twoodfin 14y agoDoes this save money for Starbucks over their own branded card? Due to the rewards available, I'd assume many of their highest volume customers are using it, and would be unlikely to switch to Square unless those rewards were transferable.
- spoiledtechie 14y agoI signed up for square about a month and a half ago. I ordered my little device at the same time and it still has not showed up at my door step. To me, they have been a lousy service so far sadly.
- rayhano 14y agoOnce Starbucks are on the Square system, might that be the perfect opportunity for Square to flip a switch and ask customers for their bank details? If Square could do a GoCardless with all those consumers that use Square, both Square and merchants could benefit massively...
- superbeefy 14y agoI really hope square improves their reader. Practically every time I've used this system, as a customer, it seems to take a couple of tries before it actually recognizes the card. This may be okay for lower volume businesses, but for starbucks I could see this backing up lines.
- lhnn 14y agoCan someone explain this to a layman who "only" uses credit cards at the moment? How is whatever this is going to make my checkout at Starbucks quicker or more convenient than a card or a $5?
- apawloski 14y agoAlthough there do seem like there are benefits for "laymen" -- paying for something by simply saying your name sounds interesting -- this isn't really directed towards you. Generally, you would likely still use your credit card with it, so your experience wouldn't be much different (positively or negatively). It's beneficial for business owners who save money by using Square and use various incentives and analytics that come with.
- OJKoukaz 14y agoSo does this mean that Starbucks will use the same Square interface that we layfolk use? I find it impractical that they use this, and not something that integrates with their existing systems, but then that would mean that Square has opened up some sort of API to them? When will the rest of us get to see something like this, if so?
- FixThisPOSSite 14y agoSo he signs "pound onward"? Don't support the use of douchetags: http://goldmanosi.blogspot.com/2012/02/douchetag.html http://goldmanosi.blogspot.com/2012/02/douchetag.html