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Starbucks continues mobile payments push with drive-thru availability

March 29, 2012

The Starbucks mobile payment app for iPhone

Starbucks is building on the significant success of its mobile payments app with several new capabilities, including making drive-thru payments available for the first time and extending its PayPal integration to Canada.

The coffee chain recently said it is the worldwide leader in mobile payment transactions and reported in December that it had exceeded 26 million mobile transactions since the launch of its mobile payment program in January 2011. To support further growth, the company has revamped its app with new features such as social integration and expanded its payment options for customers.

“I have not seen [drive-thru mobile payments] with any retailer to date, and can envision that this would be beneficial to a certain degree, especially with a product that is pre-packaged and sent out the drive-through window quickly,” said said Marci Troutman, CEO of SiteMinis, Atlanta. “With the custom coffees I do not believe this would be a benefit, since the process cannot really be sped up, and has to have a ‘wait in line’ for the coffee to be made.

“Adding a PayPal integration for the Canadian stores can be a growth driver in-store as long as the merchandise is available for a scan/buy scenario — if the merchandise is not available for a ‘quick buy’ there really is not an added benefit in-store,” she said.

“Adding the mobile payment option for out-of-store transactions for merchandise that can be shipped, or sent (i.e., gift cards) will very much help the company drive a higher rate of growth.  Some companies have experienced over 30 percent increases in mcommerce conversion rates by adding PayPal.”

Ms. Troutman is not affiliated with Starbucks or PayPal and commented based on her experience in mobile.

Starbucks did not respond to a request for comment.

The right scanner
The coffeehouse chain said in a recent blog post that the reason it waited until now to offer drive-thru mobile payments was  because it wanted a scanner that would enable drivers to perform the scan themselves rather than having to hand their phone over to someone at the window.

Additionally, the company wanted the scanner to provide a smooth experience when the weather acts up and at night when it is  harder to see.

Starbucks has also revamped its mobile payments app to include plug-ins for social media, a section to learn about Starbucks’ coffee blends, drinks and food as well as an improved auto-reload feature.

Additionally, a PayPal integration that enables users to fund their Starbucks app via the alternative payments provider and which was introduced last year, has been extended into Canada for the first time.

“The success we have seen with PayPal’s integration in the Starbucks mobile app has confirmed that there is a growing demand for easier and more secure mobile payment methods,” said Anuj Nayar, director of communications at PayPal, San Jose, CA. “The positive response we have seen working with retailers and brands such as this one continue to inspire us to further expand our trusted payment options for mobile merchants.”

PayPal is also integrated in several other mobile apps including Fandango, Pizza Express and Domino’s UK. Most recently PayPal integrated with Tabbedout, the mobile app that lets consumers pay their restaurant or bar tab in real-time directly from a smartphone.

While Starbucks has had significant success in the mobile payments space, it could be hard for other merchants to replicate this success.

“Starbucks is a retail anomaly,” said Gary Schwartz, Gary Schwartz, CEO of Impact Mobile, Toronto.

“Having a store on every corner of main street globally that commands a daily door swing for loyal clients allows their wallet to be relevant and convenient for micro-transactions,” he said. “The only stores that could manage a loyalist wallet would be c-stores and quick-serve restaurants.”

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