Square COO predicts monster 2013, says Starbucks is just the beginning

After a monster 2012 in which Square, a leader in the mobile payments space, tripled its user base, added Starbucks as a major partner, and hit more than $10 billion in annualized transactions, its COO is predicting that 2013 looks even better.

A year ago, the San Francisco-based startup, which was founded by Twitter co-founder Jack Dorsey, announced that it had reached a million users and that 75,000 merchants were accepting payments through Square. Now, COO Keith Rabois told CNET in an interview, the company has passed 3 million users and 250,000 merchants taking Square Wallet.

Without question, the company's biggest highlight of the year was integrating its payments system into all 7,000-plus U.S. Starbucks outlets. But as anyone knows who has tried using the service at one of the coffee giant's stores -- where many baristas seem not to be aware of what Square is -- the experience is a scaled-back version of the full Square Wallet service.

But Rabois, a veteran of PayPal and Slide, said that that situation is temporary, a function of the limits of how quickly the two companies could integrate their technologies given the onset of the holidays. In 2013, he said, Starbucks customers should expect full Square Wallet functionality -- meaning they can pay automatically via their smart phone -- as well as "major enhancements" and more new features "than you could ever imagine."

Rabois would not provide specifics, but said that "expanding the Square/Starbucks relationship is definitely a major initiative" for Square, and that "we're only in the first inning" of the relationship.

That makes sense, given that Starbucks is now a significant investor in Square. But Rabois said that while there is a substantial emphasis internally on broadening the tools that customers can use at Starbucks, anything new that's developed in the coming months will also be rolled out for use at every single merchant that's part of the Square Wallet program. "When we've completed what we envision," Rabois said, "the customer experience will blow people away...We're building a generalized platform here that helps all local businesses across the United States grow."

While Starbucks is Square's marquee retail partner to date, Rabois said it's fair to expect the company to announce additional retail partners in the year ahead. Already, there have been reports that luxury clothier Burberry will be adding Square integration soon, and Rabois said that as companies have seen how Square works at Starbucks, "we've been deluged with interest since [that] announcement."

In part, he added, because Starbucks is seen in the retail industry as "a beacon in mobile payments, mobile apps, and the mobile experience, so not surprisingly, every merchant is interested in following their lead."

Rabois said that as Square evaluates potential retail partnerships, it will prioritize companies that focus on the customer experience, and that have "comparable corporate values [and] an alignment about the future and where the world's going."

He also said that Square will look for partners of every size, from very small businesses to much larger operations.

At the same time, given past reports of experiments with integrating Square payments into New York City taxis, Rabois said that the company envisions Square Wallet working "everywhere," from personal trainers to interactions between friends to contractors working people's homes.

And while the company has made multiple changes to the product that is now called Square Wallet -- it was previously known as Pay with Square, as well as by other names -- it is "very pleased" with its current branding.