Big news of the day: Starbucks goes square!

In my opinion, this will be a landmark change in the payments world.

While this is great for Square, it seems to be good for Starbucks; very bad for First Data; bad for Verifone; good for all merchants; bad for all acquirers; good for established mobile wallet companies. Here is a quick analysis:

Great for Square:

Great investment ($25m) from Starbucks at a super good valuation ($3.5b)! Association with Starbucks will be like a triple shot in the arm. Great way to expand their merchant base. No more limited to smaller merchants. They have probably created a pull-effect where merchants will start calling to check out Square.

Good for Starbucks:

Starbucks was anyway doing great with its most-successful-till-date mobile application. Adding Square will just be another arrow in its quiver. It will get better aligned with the latest payment technology for some years to come. With its investment, it has better control over its payments processing. The $25m investment alone may be worth a decent fortune down the line.

Not so good for these players:

First Data – coz it just lost its acquiring business to Square’s merchant bank – Chase! Verifone – with this trend, there will be no need for dedicated terminals ( Electronic Payment Systems). With NFC not picking up and elegant solutions like ‘Pay with Square’ spreading, there will not be a need for NFC and EMV. Verifone’s core strategy today lies on the growth of NFC and EMV readiness expected to be in the terminals. Merchant acquirers in general – Unless acquirers provide state-of-the-art tools and solutions for their merchants, there is going to be a significant movement of merchants to those who are offering such solutions.

Good for these players:

Integrated wallet companies – Obviously, lot of acquirers will be looking for newer and unique solutions that they can offer their merchants. Start-ups or other companies with an established product/service will have an upper hand. Big Merchants – With this high profile shift from First Data to Chase, Starbucks would have ignited other merchants to shop around for options. They have an upper hand today with the acquirers. They can probably expect re-negotiations, better rates, better solutions, better terms from their current acquirers. Small Merchants – there are plenty of mobile wallets (Levelup, Paypal, Gopago, Revel, Paydiant..) trying to compete. It is probably a good time for small merchants to pick and choose Shopkeep POS – Paypal has partnered with this company to compete with Square’s “Pay with Square’ solution. Paypal will be pressured to probably buy this company now – at a huge premium, perhaps?

Original author: phanee