Starbucks Will Change the Way You Pay

The highest-profile test to date to see whether people actually want to pay for things with their phones will roll out next month at Starbucks.

The company announced at its huge confab today for Starbucks store managers that customers will be able to buy their coffee using Square Wallet starting in early November. Unlike Starbucks’ standalone mobile app, the digital equivalent of a Starbucks gift card, Square’s app is tied directly to your credit card and can be used anywhere that takes Square. During the initial launch, Square users will each have a barcode that’s scanned at the checkout counter, though Starbucks says it’s working on ways to make use of Square’s more advanced features down the road, such as an automated location-aware feature that lets customers pay by just saying their names.

Starbucks’ partnership with Square, headed by Twitter inventor Jack Dorsey, is the most prominent deal inked by the mobile-payment startup so far, and has the makings of a bellwether for the pay-with-your-smartphone future. While plenty of retailers already offer ways to pay with your phone, the coffee seller’s embrace of Square suggests broader ambitions. Dorsey believes that his company can create a way to pay so pleasingly superior to credit cards or cash that Square can inspire a paradigm shift. By jumping in with Dorsey, Starbucks is signaling it wants to do for buying a latte what Apple stores have done for buying a computer. They don’t want shopping to be a transaction. They want it to be an experience. (Speaking of Apple, Starbucks also announced customers will be able to pay with Starbucks gift cards using the new iPhone’s Passbook wallet app.)

Dorsey himself has praised Starbucks for its emphasis on the customer experience over the mundane details of buying and selling. “Experience” seems to be the operative term at Starbucks’ “Global Leadership Conference” in Houston, where Dorsey spoke to about 10,000 Starbucks managers, many of whom will undoubtedly serve on the tech support front lines as Square goes live in 7,000 stores across the country. To steel themselves for whatever challenges they face, those managers can take part in the conference’s pièce de résistance, described by the company as a

… nearly 400,000-square-foot immersive ‘Leaders’ Lab’ … that will guide conference participants through a two-hour interactive journey that brings Starbucks mission statement to life by highlighting coffee, customers and community.

Starbucks managers and the barista army they lead have another good reason to up their games as the company pushes its mobile payments strategy. Starting next summer, customers will be able to use their Starbucks apps and Square to tip.

Wired