Starbucks gets a shot of Square for in-store payments; Invests $25m

Starbucks has inked a deal to use the Square payments system in its 7,000 US stores, as well as splashing out $25m of investment into the Square company itself. The deal, which will see credit and debit card transactions made using Square's Pay with Square app for iOS and Android as of this fall, is expected to increase the number of times card payments are made for smaller transactions that might traditionally have demanded cash or not met a minimum payment threshold for the retailer.

Starbucks locations will also be added to the Square Directory, the list of locations which support the system, while the same data will also be leveraged for Starbucks. Eventually, Starbucks Digital Network and Starbucks mobile payment app users will be able to see the same range of Square locations in their apps.

According to the coffee chain, switching to Square for US credit and debit card transactions will reduce its payment processing costs in addition to giving the system itself a far higher profile among consumers. That's something Square CEO Jack Dorsey is particularly keen on, going so far as to point out that even Starbucks rivals will benefit from the greater attention.

"When Starbucks builds the Square Directory into their apps and in-store Digital Network, it gives Square new visibility, driving more customers to opt-in to Square" Dorsey wrote in an open letter to users. "And with nearly 7,000 Starbucks stores soon accepting Square, these new payers will be able to find your business (including coffeehouses) and pay with their name, building community and creating value."

In addition to the $25m investment, Starbucks CEO Howard Schultz will join the Square board of directors. You can download the Pay with Square app here, for iOS or Android devices.