Square Inks Deal with Staples But Starbucks’ POS Use Falters

While Square signed a new merchandising deal with Staples (NASDAQ: SPLS), the payment processor may not be moving fast enough for Starbucks. Starbucks (NASDAQ: SBUX) CEO Howard Schultz said last week he is stepping down from Square’s board of directors. Schultz joined the board last year after Starbucks invested $25 million in the startup and said it would use Square to process its payments. While the coffee chain sells Square's portable card readers, it has not installed Square’s Square Stand hardware at point-of-sale. "That's pretty soon after Starbucks and Square entered a deal, for him to be stepping down. It also doesn't seem like everything Square had talked about being available at Starbucks [POS] is in place yet,” Gil Luria, an analyst with Wedbush Securities, told PaymentsSource. Maybe Staples can boost retailers’ acceptance of Square to a new level. In the new Staples-Square merchandising deal, Staples stores will allow merchants to handle test payments using Square Register, the software that operates with the Square Stand reader. Traditionally, merchants have been “forced to make major point of sale hardware investments without the ability to test out products in advance,” according to a statement from Square. In the new Staples promotion, businesses that purchase a Square Stand from Staples in November will receive a free $200 Staples gift card. Staples will also sell Square Stand in more than 1,000 U.S. stores and on Staples.com. "Square has been all about anti-hardware and more about software and online, so this is a move to more conventional payment terminals and hardware components," Luria said. However, Square Stand has some drawbacks that are likely reducing retailers’ adoption. The hardware does not support Near Field Communication (NFC) for contactless payments and is not EMV-certified. As a result, the iPad-based terminal represents only "a temporary solution" to many U.S. merchants, Luria said.

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