The partnership with Square will also have benefits for other local merchants that are simply located near a Starbucks, given that the application has a GPS location device.
"Square is going to message [consumers] with other opportunities, offers, coupons, what have you, for relevant small businesses or stores that are in that proximity," says Daryl Colwell, vice president of business development at MediaWhiz, an integrated digital media agency.
Other mobile players
Square isn't the only mobile services provider aiming to take a bigger piece of the growing mobile payment space. From MasterCard (MA) and Visa (V) to eBay's (EBAY) PayPal and Intuit's (INTU) GoPayment, lots of companies are positioning themselves for the "inevitable."Small businesses may find Square's option cheaper than using Visa, MasterCard, Discover or American Express, which have more complex pricing structures. A merchant will pay a flat 2.75% if they use Square's app or hardware to swipe a card. (Of course the fee is more if the transaction is keyed in.) "Square is a lot cheaper for small merchants on small-ticket items, particularly after Visa and MasterCard raised their debit processing fees on small businesses," says Anisha Sekar, vice president of credit and debit products at NerdWallet, a credit card comparison website. This doesn't imply small businesses should blindly jump into the mobile payments arena. Most importantly, decide if integrating mobile payments is right for the business and its customers. "Before you jump into any of this, see how you're customers would like to pay," says Peter Shankman, social media strategist, adding, "They need to do what works for them and their customers." For instance, similar to the payment concept being used by Apple (AAPL) in its retail stores, instead of having 20 people waiting in line to pay, have salespeople walk around using a mobile device to quicken the payment process. NerdWallet's Sekar tells businesses to proceed with caution. "I wouldn't recommend that a small business rush to get Square simply because of Starbucks," she says. "Mobile payments have yet to catch on among older consumers and many remain leery of security concerns. Moreover, this is a relatively new technology, and small businesses that don't have the time or resources to follow developments closely may find themselves whipsawed." -- Written by Laurie Kulikowski in New York. To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com. To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski >To submit a news tip, email: firstname.lastname@example.org.
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