On August 8, 2012, Square, the mobile payment device start-up, announced its decision to join forces with Starbucks.  The two entities will unite at thousands of Starbucks locations across the United States to allow customers the option of paying for their purchases through the Square mobile phone application.  The joint venture has left many asking what this will mean for the retail payment industry.

Customers will have the option of making on-site payment through the mobile payment application. The venture will also process debit and credit card transactions. The aim is to streamline the payment process and strengthen the industry-wide initiative to eliminate money.

Starbucks will process customers’ orders through Square software installed on Starbucks’ existing registers. In the alternative, customers can instead use the Square-created “dongle.”  The dongle attaches to a mobile phone or iPad and transforms that product into a debit or credit card processor. 

The mobile payment sector is becoming a very significant part of how customers transact business, and Square’s may have just put itself at the forefront of this booming enterprise. Square’s product is so attractive to merchants because of its ease of use. If mobile payment continues to make such an immense impact on how we make purchases, the plan to eradicate cash just might materialize.

While Square has designed its own products and patented some of its technology, its model is not completely novel.  Square has managed to combine and make use of existing products, such as the iPad, with existing ideas that other mobile payment operators make use of, and throw a twist on it to make an innovative product.  It will be interesting to see if any intellectual property disputes arise from Square’s use of an old but revised idea.

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© 2012 Nissenbaum Law Group, LLC