What’s the Future of Passbook now Starbucks has Invested in Square?

Posted on August 8, 2012

Square saw the future of mobile payments and decided to become the visionary player in the field. To that end they have invested a lot in both applications for customers who want to pay, and merchants who want to charge for goods and services.

Source: squareup.com

Starbucks has also been a visionary in the mobile payments arena in creating an application that allows customers to pay from their phone without any of the complexity of Near Field Communication systems.

Added into this mix is Apple who announced their new Passbook payment system in June and is very closely based on some of the concepts in Starbucks’ current model. Indeed, Apple event demoed a Starbucks card within their Passbook concept at WWDC where it was announced.

Hence, when I learnt of Starbucks’ partnership with and investment in Square, I was left wondering what this meant for the future of Passbook. If Starbucks, one of the lead promoters of the system is getting in bed with Square, does this mean that other retailers will also choose Square over Apple’s Passbook? Could this be a limiting factor in the success of Passbook?

It is early to fully understand the implications of this. It may be that Starbucks is taking a multi-channel approach to payments in that they will allow customers to pay in any way they like, either through Square or Passbook, as they see fit.

Source: Squareup.com

Starbucks’ Interest in Square may also be elsewhere, on the merchant side. Today they have large POS systems which take up a lot of room and act as a barrier between customers and baristas. Howard Schultz, in his biography Onward, frequently mentions that he likes tools that allow customers and baristas to make eye contact. Hence maybe Starbucks is looking to Square to provide them with a smaller POS imprint in their retail outlets.

In any case, this is a development to watch and see what innovations Starbucks and Square bring to the table.

Passbook Specialist Center for Business and Technical Support