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Starbucks app surpasses 70M mobile payments transactions

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October 8, 2012

Starbucks customers will be able to pay with Square Wallet

Starbucks continues to make mobile payments a major focus, and is looking at new ways for consumers to make purchases using their handsets.

At a conference for employees in Houston last week, Starbucks executives highlighted the key role that mobile payments plays for the company, with more than 70 million mobile payments transactions since the launch of its mobile payments app in January 2011. The company plans to continue to build its role in mobile payments by enabling customers to pay via Square Wallet and by integrating the Starbucks app into Apple’s Passbook.

“This is a very impressive number and clearly shows that mobile payments is gaining traction with consumers across many demographics,” said Andrew Till, chief technology officer and head of connected devices for Symphony Teleca, Palo Alto, CA.

“Not all consumers want to use single purpose or store applications but would rather use multi-client applications like Square that allow them to use one application for a wide range of retail outlets,” he said.  “Clearly Starbucks has done very well to date with its own app but now it needs to push on and drive penetration amongst mobile users.

“The use of wallets like Square will also make it easier for stores to offer joint promotions where they can leverage the infrastructure in the platform to quickly deploy new types of offers.”

Mobile payments Squared
Beginning next month, Starbucks customers will be able to use the Square Wallet to pay with their mobile phones at stores in the United States.

Additionally, the company said that customers will be able to use the Square directory to find Starbucks locations. Starbucks customers will also be able to discover other businesses in the Square directory.

The news follows up on the August announcement that Square will process Starbucks U.S. credit and debit card transactions, significantly expanding Square’s scale while reducing Starbucks payment processing costs.

“Starbucks is covering its bases very well,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.” While their white labels mobile payments platform allows consumers to pre-pay for products via the integrated and commerce-enabled app, some of their customers will still want to use a credit card. Square means that a barista not making coffee could move down the line and take orders and swipe cards, to increase efficiencies and trim wait times.”

Improving customer service
Additionally, the company said that next year customers will be able to include a tip when they pay via its own mobile payments app or Square Wallet.

“I believe that by providing this capability Starbucks will be able to measure in real time customer satisfaction with the service they are receiving,” Symphony Teleca’s Mr. Till said. “If consumers see that tipping or not tipping as the case may be leads to improvements in how they are served then I am sure they will see value in this feature and use it.”

Starbucks has also integrated its mobile application with Apple’s new Passbook feature, enabling customers’ Starbucks digital loyalty cards to appear on their iPhone screen automatically after they enter a Starbucks location.

From the Starbucks app, iPhone and iPod touch users can tap “add to Passbook” once, and swipe their Starbucks pass in Passbook to pay at a Starbucks store.

“Mobile payment solutions work well when they are tied to a program consumers are comfortable with,” Unbound Commerce’s Mr. Kerr said. “Because Starbucks linked rechargeable gift cards to their payment solution, they dodged the usual consumer wariness about the security of mobile payments.

“They also have the luxury of operating a business where the average purchase is around $6, which further accelerates consumer adoption since the risks are proportionate to the amount you have loaded on your card or mobile wallet,” he said.

Final Take
Chantal Tode is associate editor on Mobile Commerce Daily, New York

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