VeriFone Drops After Square Partners with Starbucks

Shares of VeriFone PAY traded down sharply on Wednesday, falling as much as 12% in afternoon trading. VeriFone specializes in credit card payment systems, so shares might have dropped on news that Starbucks SBUX was partnering with Square -- a tech startup focused in the digital wallet space. Many tech commentators have long seen the digital wallet as the next major frontier. Companies like Google GOOG and Mastercard MA have already entered the space, although no single player has yet to emerge as a dominant force. With Square, consumers are able to purchase goods directly with their mobile phones, taking VeriFone and its credit card payment system directly out of the equation. Still, traders may be overreacting. In order to use Square, consumers must have an Apple AAPL iPhone or a smart phone running Google's GOOG Android operating system. Further, Square is not the only startup in the game: others like PayAnywhere are also attempting to cash in on the payment revolution. Although the digital wallet may ultimately be the future, it seems unlikely that credit card use will vanish overnight. VeriFone traded near $34 on Wednesday, down from $38 on Tuesday. Shares of Starbucks were little changed, down about 0.40%.