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Starbucks, the giant coffee seller, just invested $25 million in Square, the San Francisco-based payments startup.
In an email announcing the news, Square just acknowledged what we reported last month: The company is raising a Series D round of financing.
Starbucks is taking a small piece of that round. Square authorized $200 million in new shares at a valuation of $3.2 billion. The company didn’t say who—if anyone—is buying the rest of the new shares, but the New York Times reported that Rizvi Traverse Management, an investor in Playboy and Twitter, was leading the round.
The deal has a lot of other aspects:
- Starbucks CEO Howard Schultz is joining Square’s board.
- Starbucks customers will be able to use Pay With Square accounts to find nearby Starbucks stores and pay for purchases.
- Starbucks will keep making its own mobile apps, which will eventually include a directory of Square merchants.
- Square will process U.S. credit and debit transactions for Starbucks. This is huge: Starbucks’s annual sales in fiscal 2011 were almost $12 billion, about two-thirds of that in the United States.
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