Starbucks (SBUX) shocked the business world when it announced on Tuesday it will begin a partnership with mobile payment company Pay With Square. The partnership will put Square’s automatic payment service in every Starbucks café location nationwide and potentially revolutionize the way we pay for things.
Square, in its first iteration, allowed stores to accept credit and debit cards by having customers swipe their cards on a gadget that plugged into smartphones or tablets. However, the feature coming to Starbucks will eliminate the exchange of money in paper, coin or plastic form in its entirety.
Here’s how it works: The new feature called “Pay with Square” will allow consumers to open up a tab on their smartphones or tablets. The application will then guide them via GPS enabled technology to the nearest establishments and all Starbucks that accept the service. Once the customer enters the participating store the cashiers can charge them for what they purchase on their own device, thereby adding to that person’s tab. At the end of each month the customer will receive a bill after money has been exchanged all month for their daily latte.
According to Business Insider, “at the end of the day, paying with Square on your phone at Starbucks will be a very similar experience as paying with the official Starbucks app for now. The only difference is you can use a real credit card, not a pre-loaded gift card.”
Business Section: Investment Ideas
Few would debate that this type of feature is the future of payment. It is expected that it will take a few months for this feature to be rolled out at all locations. Regardless, Starbucks is making a major statement in getting behind Square. Going forward, the business model for credit card companies could be forever changed.
We have assembled a list of the companies that will be affected by this new deal. Use this to start your research.
Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for the stocks mentioned below:
1. Starbucks Corporation (SBUX, Earnings, Analysts, Financials): Operates approximately 16,858 stores, including 8,833 company-operated stores and 8,025 licensed stores. Market cap at $34.44B, most recent closing price at $45.07.
3. American Express Company (AXP, Earnings, Analysts, Financials): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $18.99B, most recent closing price at $36.65.
4. Discover Financial Services (DFS, Earnings, Analysts, Financials): Operates as a credit card issuer and electronic payment services company primarily in the United States. Market cap at $18.99B, most recent closing price at $36.65.
5. Mastercard Incorporated (MA, Earnings, Analysts, Financials): Provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers’ cheque programs. Market cap at $51.97B, most recent closing price at $418.89.
Written by Dan Connelly
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- Starbucks Corporation (SBUX, Chart, Download SEC Filings)
- Visa, Inc. (V, Chart, Download SEC Filings)
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- Discover Financial Services (DFS, Chart, Download SEC Filings)
- Mastercard Incorporated (MA, Chart, Download SEC Filings)
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