Starbucks won't adopt Square Order when Square Wallet is retired, ending mobile-payments deal
Context & Ripple Effects
Square's Starbucks account has been its highest-profile merchant relationship since the two signed on together, but the coverage shows the economics never worked: Square went on to disclose losing more than $56M processing Starbucks payments over three years, with the partnership slated to wind down in Q3 2016.
This week Starbucks makes the split explicit — declining to move onto Square Order once Square Wallet is retired — and Square had already begun repositioning around merchant hardware with an Apple Pay-ready NFC and card-chip reader announced mid-2015 before shutting down Square Order entirely.
First-order effects
- Customers paying at Starbucks through Square Wallet lose that checkout path immediately when the wallet is retired, leaving Starbucks' own app as the primary mobile-payment route.
- Square sheds a flagship account that cost it over $56M to serve, converting a headline logo win into a clean balance-sheet exit ahead of the Q3 2016 end date.
Second-order effects
- Square accelerates its pivot from consumer wallets to merchant infrastructure — shipping the NFC reader timed to Apple Pay and killing Square Order — betting that card networks and Apple, not proprietary wallets, set the in-store standard.
- Other retailers watching the Starbucks exit get confirmation that third-party wallet deals can be dropped unilaterally, strengthening the case for building payment into first-party loyalty apps instead.
Third-order effects
- The pattern points to merchant-branded apps winning US mobile payments: eMarketer counted Starbucks' app at 20.7M US users in 2017, ahead of Apple Pay's 19.9M and Google Pay's 9.3M, validating Starbucks' decision to own the rail itself.
- Wallet startups structurally retreat from consumer front-ends toward POS hardware and software services, since anchor retail accounts can be repriced or walked away from by chains with enough scale — a consolidation pressure that reshapes who funds the checkout experience.
The trend: Mobile payments are consolidating around merchant-owned apps and network-standard tap-to-pay, squeezing standalone consumer wallets like Square Wallet out of the retail checkout.