Starbucks Mobile Payments – So What? 2

Anyone who is closely watching the mobile payments space will constantly hear and read about the explosion of mobile payments in various African countries and the growth of the Starbucks mobile payments app. When you consider these two trends side by side, it is somewhat astonishing. On the one hand you have the enabling, empowerment and inclusion of a population that was previously financially excluded. On the other hand you have a population of coffee drinkers that are switching to a simplified and more convenient payment method for their daily dose of caffeine. I will post in the near future on the rise of mobile payments in Africa, but for now wanted to share 5 reasons why the Starbucks mobile payments app is in fact important.

In this post I will highlight several mobile payment initiatives. Reference to these initiatives is in no way endorsing, supporting or recommending any mobile payment scheme(s). It is simply a reference to various examples to see what we can learn and what to look out for in the future.

What has the Starbucks Mobile Payments App got to do with SEPA?

You may also be wondering what has this got to do with SEPA? Well, SEPA is the Single Euro Payments Area and all of the below initiatives are about enabling payments through a mobile device. These are and will continue to come to Europe. As shakers and movers in the European Payments space we need to know about these trends and technologies because all of the major retail, telecommunications, financial institutions are either independently or in partnership releasing some kind of mobile payments product. Mobile payments are already and will continue to be a critical channel through which payments are made not only in the SEPA zone, but globally.

5 Reasons Why the Starbucks Mobile Payments App Is Important:

1. Evolution, not Revolution

Starbucks launched the Starbucks Card Mobile app and myStarbucks app in 2009. 16 Starbucks stores enabled iPhone users to pay at the counter using a barcode generated on their iPhone screen. This was one of the first widespread examples of mPOS (mobile point-of-sales) payments. Source: Starbucks Launches First Dedicated iPhone App for Stored-Value Cards

This is important because enabling mobile payments at Starbucks wasn’t a sudden and revolutionary reaction, which you could argue is the current trend in the marketplace. Rather mobile payments was an evolution from the pre-paid Starbucks gift card which was being retained and used by the original purchaser. That’s said, enabling mobile payments in 2009 was quite incredible. Even more incredible when you consider some of the bigger technology and retail corporates are only just starting to devise and implement a mobile payments strategy.

2. Perfect Timing

Smartphone adoption, coupled with the global growth in mobile technologies is a key growth area and attracting massive investment and attention worldwide. Starbucks is seen as a global leader in mobile payments, mobile loyalty scheme implementation and the overall mobile consumer experience

  • Today, the Starbucks brand has grown to over 20,000 Starbucks stores in 64 countries
  • Starbucks Card program is available in 28 countries
  • Card Transactions account for more than a third of all transactions in the US and Canadian stores
  • Over 10 million customers are actively using the Starbucks mobile app, double the number that used the app 1 year ago
  • Mobile payments account for over 14% of sales in the US and Canada
  • The success of the mobile payments, loyalty and end user experience is prompting interest from tech and retail companies keen to license and /or white label the Starbucks mobile payments technology

Source: Starbucks Corp – Q2 2014 Earnings Call Transcript

3.Public Willingness to Try Mobile Payments

With 5 million Starbucks mobile payments per week, the system and process is self perpetuating. One see’s or hears someone else making a Starbucks mobile payment, and the next day they are doing the same! The convenience of making mobile payments for coffee changes the mind set of individuals to recognise, experience and embrace mobile payments. Of course, there still some apprehension about the technology – but there is a definite shift in peoples perception and willingness to utilise mobile devices as a method through which they can make payments.

4. A Complete Customer Experience

The Starbucks mobile payments strategy isn’t just about enabling mobile payments. The Starbucks strategy is a complete customer experience:

  • A coffee shop that offers free Wifi! So simple, yet so effective!
  • Enabling the Starbuck cash register to scan the customers mobile phone bar code is simple but revolutionary. The bar code scan at the POS concept leveraged existing technology available at all Starbuck outlets. The concept was spearheaded by Benjamin Vigier and his team – by the way, Benjamin is now heading up mobile payments at Apple
  • Pre-paid payment and gift cards
  • A Loyalty program that ties into each of the above, and offers real time and instant rewards

5. The Rise of Mobile Payments Solutions

Technology and retail companies are taking note of the Starbucks ‘model’ and actively pursuing their own mobile payments solution(s)

Rumours are rife, and there are various initiatives being worked upon/released:

  • Apple is reportedly devising a mobile payments strategy which includes:
    • Utilising the fingerprint scanner (Touch Id) as a way of allowing individuals to authenticate themselves and log into apps, through which payments are made
    • The Passbook App, which allows individuals to store centrally coupons, tickets and loyalty points — the perceived advantage is that if these are stored in one place, it will make it easier for the individual to manage and make use of
    • Expanding the use of iTunes, through which Apple has approximately 500 credit card details on record
  • EBay’s payments arm, Paypal, has launched Beacon – a Bluetooth Low Energy (BLE) device that enables payments to be made via the users Paypal phone app
  • Google has also launched a Mobile Wallet that enables its users to store debit/credit/loyalty/gift card details and in turn make payments via the Google Wallet app. The technology uses both NFC (Near Field Communication) which requires the user to tap/swing their phone on/near the NFC payment terminal. If the mobile device doesn’t support NFC, you can sign into the online app (Buy with Google button) and issue/approve the payment by entering your user-id/password details. The app is available on both Android phones and on Apple (iOS) phones
    • The Google Wallet app is also supported by MasterCard PayPass and Visa PayWave
    • Currently the Google Wallet App is only available in the US…
  • The above is not of course a complete and comprehensive list, Samsung, Vodafone, Barclays, Visa, the list continues……. a whole host of other providers have or are in the process of releasing some kind of Mobile Payments offering

Source: Why Is The Starbucks Mobile Payments App So Successful?; How Do You Win The Mobile Wallet War? Be Like Starbucks.

The Starbucks CEO Howard Schultz in a CNBC interview in April 2014 says “there is no consumer brand on the planet today that can endure and succeed unless it is being integrated seamlessly with a digital, social and mobile strategy”. Based on the above you can certainly say this is true and in motion at Starbucks.


The Starbucks mobile payments strategy is an important consideration for other mobile payments providers because:

  • The Starbucks strategy has been evolutionary, even though the technology concept was revolutionary
  • Smart phone adoption coupled with the growth of mobile payments solutions will continue to grow
  • The initial concerns associated with mobile devices as a mechanism through which to make mobile payments are increasingly diminishing, and there seems to be a general willingness to at least try out new mobile payment solutions
  • A mobile payments strategy shouldn’t just be about enabling mobile payments, it should offer the customer a simple, secure and complete ‘experience’ — all of these everyday experiences, such as tipping, should be conveniently offered through the mobile app
  • It has prompted other providers to ‘wake up and smell the coffee’. The availability of other mobile payment solutions will provide healthy competition and should in turn provide the customer with a better experience overall
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Ok, now over to you. Do you agree with the above? Do you think the Starbucks mobile payments strategy is important, or is it just another one of the many out there with little overall benefit….?

2 thoughts on “Starbucks Mobile Payments – So What?

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