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The fact that Starbucks with its thousands of stores will retain its existing POS system and not use Square’s card reader or its Square Register product for the iPad is no surprise to mobile-payments consultant Todd Ablowitz, who says the system comes from International Business Machines Corp. “Why would they throw that stuff into the Dumpster?” he asks. But Ablowitz, president of Centennial, Colo.-based Double Diamond Group, says the payment operation could evolve. “It’ll be interesting to see what Starbucks does at new stores. If I were IBM, I’d be updating my pipeline.”

Square typically aggregates transactions and stands in as the merchant of record for card payments. Starbucks’s size, however, almost certainly means it will have its own merchant account with Square or an acquirer behind Square. Neither company would comment about that matter.

Digital Transactions, August 8, 2012