Square plans to announce a new location-based service today that will let customers place coffee orders from their phone and have them ready when they arrive.
But the service will not be available at Starbucks despite the Seattle coffee chain having a once-close relationship with the San Francisco payments company. In fact, rather than work with Square, Starbucks confirmed it will be building its own mobile ordering technology slated to come out later this year.
“We have a history of deploying innovative, integrated mobile payment and loyalty solutions at scale,” a Starbucks spokeswoman said. “Mobile ordering will be no different. To do this right, we simply can’t outsource it.”
Still, Square has managed to pull off a logically challenging service, complete with a prediction tool that enables coffee to be timed with the arrival of the customer, ensuring a fresh, hot cup of Joe. This is done through location tagging around each coffee shop, Square says.
The service, which is now live in the Square Order app, will initially roll out with Blue Bottle Coffee in San Francisco and New York City. The coffee shop, known for its slow drip coffee, can often be seen with lines wrapping around the block, making mobile ordering a huge perk for customers in a rush.
Another benefit of using the app is something Square calls “buyer preference,” which allows customers to save their order, so that the can easily open the app and place their order in a few taps.
Currently, Square Order is free for customers, and with any other payment powered by Square, sellers are charged 2.75 percent per sale. There’s no additional charge to offer Order.
In July, Starbucks’ Chief Digital Officer Adam Brotman outlined how mobile ordering will work when a pilot launches later this year in one undisclosed market.
Among other things, Starbucks said it is testing how long it takes different drinks to cool, which is clearly a huge factor when ordering in advance. Square is obviously addressing this, in part, by monitoring a customer’s location and timing the order with his or her arrival. To participate in Starbucks’ program, customers will have to be a member of its loyalty program.
The partnership between Square and Starbucks never really panned out the way it was intended to after Starbucks invested two years ago.
At the time, Square was rolling out a mobile wallet that Starbucks promised to help promote. In turn, Square started processing all credit card transactions made at a Starbucks, a deal that is costing Square millions (at least $20 million in 2013 alone).
In May, Square said it was giving up on its Square Wallet application and focusing on mobile ordering, so today’s announcement is an extension of that. On Monday, it was reported that Square raised an additional $150 million in capital, valuing the six-year-old company at $6 billion.