Starbucks and Square have officially ended a long standing relationship that we learned earlier this month was costing Square millions.
Starbucks says J.P. Morgan will now process transactions at stores across the country, letting Square off the hook early after unfavorable contract terms meant it spent about $70 million more to process Starbucks transactions than it was paid since 2012.
We won’t know exactly how the change will affect the coffee king’s bottom line for a while, but you can imagine J.P. Morgan learned from Square’s mistakes and carved out a better deal for itself.
The partnership between Starbucks and Square got underway in 2012, when Starbucks invested $25 million in the then-skyrocketing startup. Starbucks CEO Howard Schultz joined Square’s board at the time and the company began processing payments at all the company’s coffee shops.
But pretty soon, reports started surfacing that the deal wasn’t working out so well for Square. When the company filed to go public earlier this month, we saw just how bad things had been.
Square reported that it had recently reworked the contract in order to free Starbucks up to cancel their partnership and choose another payments processing provider. J.P. Morgan, as it turns out, will be that new partner.