Two years ago, I met Square CEO Jack Dorsey at Third Rail, one of his favorite coffee shops in downtown New York. He held up a small plastic square and told me that the future of payments was in this tiny device.
The entire industry was about to change, he said.
Dorsey was in the middle of a major change himself. Recently ousted from Twitter, the company he cofounded, he rebounded by shifting his famously intense focus to a new pain point: the way we pay.
Square's pitch -- a simple fee structure and technology that just works -- was a quick hit with small merchants like Third Rail. Square now has 2 million users and an annual transaction volume approaching $6 billion.
That was just phase one, it turns out. Dorsey wasn't kidding about reinventing the entire concept of payments. Last week, he struck a partnership that will begin to bring his vision to the mass market.
This fall, Starbucks will begin accepting payments through Square's mobile app. Customers will be able to pay for their lattes by holding up their phone and allowing Starbucks to automatically charge the customer's card on the back end.
That's the first step. In the not too distant future, Dorsey and Starbucks plan to let customers ditch their phones completely. All they'll need is the Pay With Square app and a name.
"You can actually walk into a merchant, keep your phone in pocket, keep your wallet in your pocket, and a picture of you pops up on the register," Dorsey told me. "You can just say 'I'm Laurie, and I'd like a cappuccino,' and your card is charged in the background."
Square has been experimenting with that kind of almost invisible payment system at small shops like New York's Café Grumpy, but Starbucks can dramatically accelerate it. The company averages more than 8 million customers a day.
Those shoppers are already embracing mobile payments. Starbucks introduced its own pay-by-phone app last year and is now doing 1 million transactions a week through it, according to CEO Howard Schultz.