Mobile Payments Revolution: Square, Starbucks Deal Kicks Off
NEW YORK ( TheStreet) -- The deal which brought the mobile payments revolution to the forefront of the minds of consumers and investors minds starts Thursday. Starbucks'(SBUX) deal with Square is being rolled out at approximately 7,000 Starbucks stores.
Square Wallet is going into effect for Starbucks customers, and the two companies hope the relationship transforms the experience for its customers and makes things easier.
"We look forward to continuing to create amazing connections with our customers -- both in our stores and outside of our stores and offering our customers choices in how they want to pay," said Adam Brotman, Starbucks chief digital officer, in a press release. "Starbucks believes in the values and vision of Square, and just three months after announcing our partnership with Square, we are thrilled to make the convenience of paying with the Square Wallet app available to our customers starting today."
Square Wallet will give customers the ability to pay at Starbucks, while exploring nearby businesses and browsing menu information, among several other features. The free app is available on both Apple's(AAPL) iOS platform and Google's(GOOG) Android platform.
Square, led by Twitter co-founder Jack Dorsey, has been at the forefront of the mobile payments revolution, and the start of this deal will be the beginning of how customers pay for everyday goods and services.
"Square Wallet gives people an easy way to pay at Starbucks and neighborhood businesses," said William Henderson, Square Wallet director. "We're excited to work with Starbucks to introduce a broad new group of people to the benefits of using Square."
Starbucks did $3.36 billion in revenue in its fourth quarter, with a significant portion of those transactions being credit and debit-card sales. Starbucks does not break down the percentage of payments.
Starbucks has its own mobile payment app, but the deal with Square takes the mobile payments industry on another level. "Starbucks has scale with ~7,000 U.S. stores (~4,000 licensed), and the partnership will likely be a key reference case for awareness of mobile retailing," JPMorgan wrote in a recent research note discussing the initial deal between Square and Starbucks.
It may take a while for consumers to adapt to the Square Wallet, but the future is in mobile payments. According to data from Ernst & Young , mobile payments are expected to be big business. The market is projected to reach a massive $245 billion by 2014.
Companies are fighting for everyone of those dollars, and the deal starting so soon after the announcement puts Square in an enviable position to capture a significant portion of that market.