For those unfamiliar, Square is a brilliant app. You sign up on their site, you get a little card scanning doohickey in the mail, and you can now take credit cards, just like a major merchant. They take a small percentage off the top and everything else is yours.
It’s cheap, it’s simple, and a good chunk of the payments industry hates it. They hate it because the payments system in this country is kinda backwards technologically and ridiculously overpriced. Companies like Verifone require you to spend thousands on their systems, which they then charge you to use. Square, you just plug it into a $600 smartphone and you’re done.
So Starbucks deciding to go all Square-exclusive is pretty much a huge drop-kick to the junk for an entire segment of the payments industry.
Why should you care?
Until now Square has been the province of craft fairs and hipster coffee shops in San Francisco. Now it’s going to be in pretty much every urban area of America. It’s not just companies like Verifone that Starbucks has waved its coffee-scented dong at. Keep in mind that Google has a mobile payments system; Verizon is building one; Apple likely has one on the way; and even Facebook is getting into this area.
Basically, Starbucks just threw down. They’re getting a seat on Square’s board as part of this deal, so they’re invested in the company. Starbucks doesn’t just want to get rid of giant cash registers at their stores — it wants to make money every time you swipe a card.
Unlike a lot of the tech sector, this is a pretty serious deal. The business of running your credit card is a multi-billion dollar one. Many merchants will follow Starbucks’ lead. And now they’ve got an entire industry running scared.
Yeah, this’ll be… interesting.
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That’s… I don’t know yet… I need to think about how I feel on this one. Knee-jerk reactions never help.
According to WebMD, coffee scented dong can be caused by a number of things.
The concern I would generally have with using a handheld device to scan my card with obviously has to do with privacy concerns and information storage. THAT would seem to drive people away from the product. It’s one thing to run your card through a terminal and punch in a PIN, it’s another to let some barista scan your card and then walk off with the data on his little hand-held.
I think I have about 1 cup of coffee a year, so it’s not an immediate worry to me. I’m just seeing into the future.
Of course all of this is foiled if people just pay in cash.
Not really, though. Actually, most POS systems have incredibly shitty security. Ask anybody who’s gotten ripped off because gas stations can’t be bothered to send that minimum wage guy behind the counter to tug on the card readers and make sure there are no skimmers.
I think this is a very ballsy move and also really awesome.
It will take someone with that kind of clout to really upset the balance.
I’m curious to see if they’ll follow through in europe though. We have a more established culture of paying for everything with our cards here. On the rare occasions that the payment systems go offline nobody can buy anything, because most people don’t carry cash. I remember when it happened on a friday night, and nobody could buy any drinks. Everyone just went home and the bars complained loudly in the media the following day, haha.