Chain Blue Bottle Coffee Co. has teamed up with Square with new merchant and consumer-facing initiatives that will let consumers use their mobile devices to buy drinks.

Blue Bottle Coffee is using Square to let consumers pay via their devices. The mobile payments are available in three of the company’s locations with plans to roll out to all 11 locations in the coming months.

“The incumbent payment systems are not going away,” said Gary Schwartz, author of “The Impulse Economy” and “Fast Shopper, Slow Store.”

“175 million Americans carry credit or debit cards, which is increasing dramatically with prepaid general purpose reloadable cards such as Vanilla Visa,” he said. “Americans use plastic for 65 percent of all in-store purchases.

“Up-starts such as Square and PayAnywhere and digital innovators such as Paypal want to leverage this install base for small to medium-sized enterprises without the need to upgrade their existing point-of-sale system. By providing these solutions to small to medium-sized enterprises, vendors such as Square now control the final foot of the transaction.”

Mr. Schwartz is not affiliated with Blue Bottle Coffee or Square. He commented based on his expertise on the subject.

Neither company responded by press deadline.

Pay on mobile
Blue Bottle is using Square’s Register product to let store employees complete transactions by plugging a small card reader into iPhones and iPads.

This could be particularly beneficial for Blue Bottle given its group of consumers who are most likely making small, routine purchases but might not have cash on them.

Additionally, the coffee chain is integrated into Square’s consumer-facing Wallet application for iPhone and Android devices.

Consumers can download the app and create an account that is tied to a credit card number. The app then uses GPS to find nearby businesses where Square payments are accepted.

The app can also be set-up so that all a consumer has to do is say their name to the store’s employee to be charged.

Additionally, consumers can send virtual gift cards via the app by entering an email address. Recipients can save the gift card via the Square Wallet or print out a QR code that is scanned in-store to redeem the gift.

Square is initially being launched at Blue Bottle’s San Francisco, Oakland and Brooklyn locations with the technology rolling out to the remaining stores in the coming months.

Small purchases
Square’s deal with Blue Bottle points to the growing need for consumers to use their mobile devices to make small purchases. Additionally, merchants are looking for ways to streamline their point-of-sale systems.

Most notably, Square also has a big deal with Starbucks that lets consumers pay via the Square Wallet app (see story).

As Square continues to build out its mobile strategy, its success will be based on creating a way for both merchants and consumers to easily pay for and transact items using their mobile devices.

Additionally, loyalty will play a critical role in how small and medium-sized businesses approach mobile payments.

“The question to ask is who owns the customer relationship, because it is ultimately this relationship that you can monetize,” Mr. Schwartz said.

“The emergence of mobile and card-linked offers is making the point-of-sale systems in the cloud and eventually in the store, the new promotional depot for digital deals and coupons,” he said. “So-called big data and value-added services will ultimately yield the most profit.

“Similarly, Google and Apple want to get in the middle of the value chain and to disintermediate the card vendors by aggregating large volumes of transactions and pass them back to the banks as prepaid with low interchange fees. New payment players are commoditizing the old business hegemony of Visa and MasterCard and going over-the-top.”

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York