What the Square-Whole Foods deal really means

Square announced its partnership with Whole Foods Market (NASDAQ: WFM) with much fanfare earlier this week. As the mobile payments tech provider should. While Square is used primarily by independent retailers and restaurants, this is Square's first deal with a major national grocery chain.

And it signifies consumers' growing acceptance of mobile payments. In the not-too-distant future, major brick-and-mortar chains that don't offer fast, easy payment systems like Square will be the anomaly. Grocery chains are the perfect market for this payment tool. Long lines at grocery stores are one of shoppers' biggest complaints, and are the reason many chains added self-checkout lanes. Then, after consumer backlash over the lack of human cashiers, some grocers did away with those lanes. Square offers a much better option.

In the case of Whole Foods, customers will be able to skip the main checkout lines to pay at specific in-store venues using Square's POS system. "Together with Square, we'll deliver options to expedite checkouts, and we look forward to developing new concepts to further simplify and improve grocery shopping," said Walter Robb, co-CEO of Whole Foods.

Further, several Whole Foods Market locations will serve as "lab stores," testing additional innovations designed to enhance customer service and cater to the changing needs of shoppers. It is gratifying to see that Robb and the executive team at Whole Foods really understand the future potential of technologies such as Square.

Starbucks (NASDAQ: SBUX) – typically a very progressive company – on the other hand, does not get it. Even though Starbucks invested $25 million in Square and planned to utilize the startup to process its payments, it has not installed Square Stand hardware at point-of-sale.

Plus, CEO Howard Schultz resigned from Square's board of directors last year. "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 in November.

For more:
-See this Whole Foods announcement
-See this MediaPost article
-See this The Street article

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