Customer Complaints Plague Square; Could Affect Starbucks Relationship
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With all the hoopla surrounding Starbucks (NASDAQ: SBUX) venturing with Square, I thought to do a little research on this mobile payment processor, which managed to catch the eye of the coffee house giant. What I found was not only intriguing, but also somewhat worrisome.
Before I get to my qualms about the service, I’ll start with some background information.
Starbucks and Square announced last week that they were teaming up to take buying food and beverages from the coffee house giant to a whole new level. Through a $25 million investment in Square, Starbucks will use the company to process all of its credit and debit transactions throughout the U.S. starting in the fall.
This is only one part of what is yet to come. The goal for both companies is to shift the point of sale buying experience to a cashless transaction, something that Starbucks has already started to do through its Starbucks Card. Ultimately, Starbucks customers will be able to order and pay for their goods simply by telling the barista their names.
Square is a relatively new company and is joining a field that is already filled with other companies offering similar payment processing services. Those companies include Google's (NASDAQ: GOOG) Wallet, Intuit's (NASDAQ: INTU), Pay Anywhere and eBay’s (NASDAQ: EBAY) Pay Pal.
All of these companies supply card readers to merchants, which can be installed through the headset jack on their tablets and/or smartphones. A customer simply swipes their card as they would at a point-of-sale terminal in a store, and voila, the transaction is processed, the merchant is paid, and everyone is happy.
As I reviewed Square and how it stacked up to others, the first thing to catch my attention was the exhaustive number of complaints that had been lodged against it. They were mainly from merchants who took to the Internet to vent all types of frustrations on websites that ranged from RipOffReports.com to the Better Business Bureau.
The main complaint stemmed from Square’s customer service, or lack thereof. When you visit the company’s website, squareup.com, you’ll find a plethora of information about receiving the card reader, how to link your sales to your bank account, and even how to use Square card processing for political fundraisers. However, you won’t find one customer service phone number.
Nada, zip, nothing that can direct you to speak to a live person if you have questions or concerns that are not addressed on the website. You will instead be pointed to a slew of FAQs under the help tab, and ultimately you will be pointed toward an email page to voice (jot down) your concern.
Perhaps I am truly archaic in thinking that a company that handles my money should have a phone number I can use to call to speak to a customer service rep. After pouring over the reviews on Square, this lack of a live customer service person to speak to has incensed many and has even cost Square customers.
Starbucks touts its partnership with Square as a way to “accelerate the ability of small businesses to grow with Square’s innovative technology and a stronger and more widely available Square network.”
I can see this as being a challenge if merchants are griping, legitimately, about not having access to live customer service representatives. I must point out that Intuit, Pay Anywhere and Pay Pall do offer toll-free numbers that link to live customer service representatives. What’s to stop a merchant from going to Square’s competition in their quest to have access to a customer service phone number? Is this too much to ask? I think not. Remember the backlash many of the big banks suffered when they tagged customers with fees because they chose to speak to a human instead of going the electronic push-this-button-for-this-issue route.
How much any of this banter about customer service weighed in Starbucks' decision to choose Square is not apparent. What is apparent is what Starbucks will gain. Its chairman, president and CEO Howard Schultz, will join Square’s board of directors. This should play an important role in how much input Starbucks will have in shaping how Square can help to positively impact its bottom line.
Customers that have Square’s payer application on their mobile devices will be able to use it to find nearby Starbucks locations within Square Directory. The directory will also help Starbucks customers find local Square businesses, ranging from specialty retailers to crafts businesses, according to Starbucks.
Starbucks will also reduce its payment processing costs, although the company did not detail the amount of the savings it may reap. Fees that merchants are charged for credit and debit card transactions have become bones of contention.
In fact, a consortium of retailers that includes Target, Wal-Mart and CVS Caremark was just announced on Wednesday. Calling the alliance the Merchant Customer Exchange, this effort provides a fresh new approach to how customers will pay for their goods.
Square is trying to capitalize on consumers and businesses wanting a faster and easier way to use their credit and debit cards. Given the ever changing and growing number of companies entering the mobile payment space, it seems counterproductive to aggravate customers over something as simple as providing straight-forward customer service.
It will be interesting to see how much this may affect Starbucks' endeavor with Square. If Square presents hurdles that chase merchants away, it could be a problem for Starbucks' $25 million investment.
TwillyD has no positions in the stocks mentioned above. The Motley Fool owns shares of Google and Starbucks. Motley Fool newsletter services recommend eBay, Google, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
