- e-magic at http://www.flickr.com/photos/emagic/87233305/
Back in 2012, Starbucks and payments processing startup Square looked like a match made in heaven.
Originally, Starbucks wanted to add mobile ordering to its smartphone app portfolio, and tapped Square for its expertise.
And on the backend, every card swipe at Starbucks was processed by Square, which the coffee chain claimed was a huge cost savings versus its existing partnership with Bank of America.
The fact that Starbucks CEO Howard Schultz sat on Square’s board in 2012, following a big early investment from the coffee chain, was also probably a factor in the deal. But in 2013, Schultz stepped down from Square’s board, saying it was always his intention to stick around for a year.
And in late 2014, Starbucks discontinued most of its app partnerships with Square, opting instead to bring development in-house. And market analysts were whispering that Square only managed to entice Starbucks over to its platform with seriously discounted rates that it hoped to make up for in volume.
Square has already let Starbucks out of its contract, which was supposed to last until October 1st, 2016, a full year early. Ahead of that switch, Square dropped Starbucks’ exclusivity contract this past August, meaning it was free to find another payments processing solution.
The filing indicates that Square will not be renewing that contract when it’s officially up next year, and Starbucks will be moving to another payments processor solution sooner rather than later. In the meanwhile, Square is looking to make up for lost time, or at least revenue:
“Starbucks also agreed to pay increased processing rates to us for as long as they continue to process transactions with us,” Square said in its IPO filing.