Starbucks, the ubiquitous coffee shop chain, has announced that it will not only use technology from mobile payments start-up Square in stores, but that it is also investing $25 million in the company.

Set up by Twitter co-founder Jack Dorsey, Square originally let merchants accept card payments using smartphones or tablets. Earlier this year, though, it launched Pay With Square, allowing customers to pay for goods using only their mobile devices.

Later this year, nearly 7,000 of Starbuck’s US outlets will support Pay With Square, despite the fact that Starbucks already has its own mobile application that allows customers to pay for their coffee. Square will also process all of Starbuck’s credit and debit cards payments in the US. This reduce the company’s payment processing costs, it says.

In return, Starbucks will invest $25 million in Square as part of its ‘Series D’ financing round. Starbucks CEO Howard Schultz will join Square’s board of directors.

In its previous investment round, Square raised $100 million, valuing the company at $1 billion.

“The evolving social and digital media platforms and highly innovative and relevant payment capabilities are causing seismic changes in consumer behavior and creating equally disruptive opportunities for business,” Shultz said in a statement. “Both Starbucks and Square take a similar approach when building products and running our businesses, and together we can bring the best possible payment experience to Starbucks customers.”

Starbucks is one of a growing breed of companies to have appointed a chief digital officer, an executive with responsibility for web and mobile technology channels.

In March it appointed both a new CDO, Adam Brotman, and a new CIO, Curt Garner. Brotman is in charge of Starbucks’ “core digital businesses, including web, mobile, social media, card, loyalty, e-commerce, Wi-Fi, and the Starbucks Digital Network [an in-store entertainment portal],” and reports to CEO Schultz.

CIO Garner, meanwhile, oversees “global technology and engineering services for all Starbucks businesses and operating organisations”, including retail systems, back-office IT and global IT infrastructure. He reports to the company’s CFO.

Square is not yet available in the UK. Swedish start-up iZettle, which offers comparable functionality, is currently running a trial in the UK.