Starbucks expands mobile payments

US customers will soon be able to pay for their coffee with their smart phones.

By TheStreet Staff Dec 21, 2010 12:19PM

MainStreetCredit: (© Michael Conroy/AP)
Caption: Customer in a Starbucks storeBy Brian O'Connell, MainStreet


Coffee giant Starbucks (SBUX) will roll out a new mobile payment system nationwide early next year after successful trial runs in New York, California and Seattle.


In a note to customers dated Nov. 1, product manager Chuck Davidson said the Starbucks mobile app is up and running in 300 locations in New York and at select stores in Seattle and Northern California.


The mobile app is available on BlackBerry and iPhone models but not Android phones, although a Droid app is "currently under review," the company reported.

To use the app, Davidson said, customers should "download the free Starbucks Card Mobile app on their supported mobile device. In addition to the mobile payment feature, the app allows customers to manage their card account, reload their card balance directly from their smart phone with any major credit card, check their My Starbucks Rewards status or find nearby Starbucks stores. With the Starbucks Card Mobile app, customers will have a bar code on their screen that they'll hold in front of a 2-D scanner on the counter to pay for their purchase."


According to Boston-based Aite Group, mobile payments will grow from $16 billion today to $214 billion in 2015.


"Retailers that don't hop aboard the mobile payments bandwagon are making a big mistake," said Gwenn Bezard, a research director with Aite Group and the author of the study "U.S. Mobile Payments: The Time Has Come." "Many organizations within the industry remain unaware that mobile payments are in a period of rapid transformation," she said.


"Those that have any desire to play a role in this market must wake up now."


That's exactly what Starbucks is doing, but it's the customers who are driving the company's mobile app program. "We're seeing more and more customers using their smart phones as their mobile wallets," said Brady Brewer, the vice president of Starbucks Card and Loyalty. "We've heard from our customers that they want a faster, more convenient way to pay."


The company says 71% of its customers use an iPhone or a BlackBerry. Stores that have implemented the mobile app program say that use is already high, with one in five customers paying for their coffee with either a Starbucks card or via the mobile app.

But Brewer said the company is already seeing evidence that customers will switch from using Starbucks cards to the digital app -- a shift the company welcomes.


"With the expansion of mobile payment to New York City, we expect to see more and more customers trading their plastic Starbucks Cards for the digital version on their mobile phone," she added.

Download the app at the iTunes store (for iPhone users) or, for Blackberry users, just text the word "GO" to 70845. Or you can download the app here.


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