Starbucks Adds Square for Mobile Payments

In a move that in one sense shows the scale of Starbucks mobile payments operations, and might ultimately suggest other opportunities, Starbucks is outsourcing its mobile payment operation to Square. 

Users will simply use the Pay with Square app in place of the current app. At least so far, the advantage for Starbucks might be more tactical than strategic. Some think Starbucks will get better rates on each payment, than it had been able to do using its prior in-house method.

Others might suggest that the cost of supporting the mobile payment operations has grown to the point where outsourcing that particular function makes more sense than doing it in house. 

Basically, the Pay with Square app will be used by Starbucks in a "stripped down" version, allowing users to display a Square bar code that works with the existing Starbucks bar code scanners. 

Starbucks has said nothing about using the Square credit card dongles, or changing out its current point of sale infrastructure. 

In similar fashion, many of the full Square analytics features will not be used, since Starbucks seems comfortable with its own analytics. 

But the move does suggest Starbucks sees some future upside to using Square. What isn't clear is whether that is a tactical decision, such as often made by firms when they switch from an in-house or proprietary application to a "standards-based" alternative, or something more.