There’s an interesting wrinkle to Starbucks’ agreement to invest $25 million in Square and use it for in-store smartphone payments.JP Morgan Chase is an investor in Square, and Square uses the bank’s Chase Paymentech subsidiary to process debit and credit transactions.
We’re told that Starbucks has been using Bank of America Merchant Services, a joint venture of B of A and First Data, to take cards.
A spokesperson for Bank of America Merchant Services declined to comment.
Starbucks also declined to discuss who ran its card transactions before. But a spokesperson confirmed that it is now moving all of those transactions to Square, whether or not consumers pay with Square’s mobile app. That means JP Morgan just won a nice piece of business from Starbucks.
First Data directly processes prepaid Starbucks Card transactions. That’s not affected by the Square-Starbucks deal.
There’s another way Chase just won. Starbucks invested $25 million in Square at a $3.2 billion valuation, nearly double its last round. That means Chase, which took a 5 per cent stake in Square last year, has seen its investment nearly double in value in a year.
(We also asked Square and First Data for comment, but they declined.)