Starbucks Mobile Payment Demonstration

The Starbucks mobile payment system might accurately be described as consumer experience and loyalty program, more than a technology breakthrough. It uses a minimum of new in-store or consumer technology and an initially-simple way of replacing a credit card swipe with a bar code reading.

 The 2D barcode in the Starbucks Mobile Card app, which is no longer a QR code in the latest version, currently appears to encode only the card account number, effectively acting as a replacement for the magnetic stripe, notes FaceCash CEO Aaron Greenspan.

"Right now from the POS viewpoint only encoding the account number works well because it doesn't require any additional POS customization," says Greenspan. The advantage is speed: the transaction is fast because it's treated effectively the same as a card swipe, which is already pretty fast.

Starbucks Mobile Payment System Didn't Use NFC for a Reason

Technology decisions ought to be dictated by business requirements, and so should the timing of technology investments. Generally speaking, if a business can wait for the "next generation" of technology, it often should do so. If it cannot wait, and has an immediate business need, it should buy the existing solutions, especially if there is an upgrade path.

The Starbucks mobile-payment app, now available for iPhones, the iPod Touch and several BlackBerry models, is based on the coffee chain’s popular prepaid Starbucks Card, and is an example of that sort of process. You might wonder why Starbucks would deploy a 2D bar code solution now, when it could wait 18 months to two years and possibly use a new system based on one or more near field communications platforms.

The answer is that Starbucks did not think it could afford to wait. Nor, in one respect, is the Starbucks mobile payment system primarily about "payment." It is about loyalty, especially the Starbucks card.

Customers use the private-label card for one in five transactions at Starbucks coffee shops and last year loaded $1.5 billion in their card accounts, up more than 20 percent from 2009, said the company. Since the mobile payment app is linked to the Starbucks card, and since the Starbucks card itself if more about loyalty than "payment" as such, Starbucks is betting that the chance to extend its loyalty program to the mobile handset is worth doing right away.

Not unimportant is the fact that 2D bar codes can be used by a wide range of handsets, while near field communications is only now starting to be introduced. In a scale business, the advantage of large installed base is obvious. So is the fact that the terminal upgrades at roughly 8,000 locations are modest.

With the app, after the customer scans the 2-D bar code at the point of sale, Starbucks deducts the amount of the purchase from his Starbucks Card account over the network.

The physical implementation might not be the most elegant imaginable (one has to have a physical Starbucks card first, and you have to obtain one physically, at a store), but that was not apparently the most-important consideration. Speed to market, low cost and ubiquity seem to have been the overriding considerations.

Starbucks’ Bar-Code Embrace Unlikely to Slow NFC

Starbucks Mobile Payment System is Really About Loyalty

About 20 percent of Starbucks transactions are made using a Starbucks Card, which provides users with a rewards program. Mobile payment "will extend the way our customers experience and use their Starbucks Card," says Brady Brewer, Starbucks Card and Brand Loyalty VP.

Starbucks said customers loaded $1.5 billion onto Starbucks Cards in 2010, a 21 percent jump over 2009.

In a real sense, the Starbucks mobile payment system is more about loyalty than "payments."

Starbucks Unveils Mobile Payment System for BlackBerry, iOS | News & Opinion | PCMag.com:

Starbucks Rolls Out Mobile Payments at 7500 Locations

Starbucks is launching its mobile payment system nationwide, to 6,800 of owned stores, plus more than 1,000 outlets inside Target stores. The Starbucks mobile payment system will work initially on iPhones, BlackBerries and iPod "Touch" devices, with an Android version in the works.

To use the system, Starbucks cardholders load an application onto their iPhone or BlackBerry smartphones. The application displays a barcode that's scanned at the register to pay for drinks. Users can also manage Starbucks accounts and find nearby stores with the application.

One in five Starbucks transactions is now made with the store cards, and mobile payments "will extend the way our customers experience and use their Starbucks Card," says Brady Brewer, vice president of card and brand loyalty. 

Customers apparently like using Starbucks Cards. They loaded more than $1.5 billion onto the cards last year, up 21 percent over 2009.

Starbucks said more than a third of its U.S. customers use the devices, and nearly three fourths of the smartphone-toting Starbucks customers have either an iPhone or a BlackBerry.

http://www.starbucks.com/coffeehouse/mobile-apps/starbucks-card-mobile

Looks Like Your Starbucks Purchases are a Coincident Economic Indicator

Your spending at Starbucks and Dunkin' Donuts looks like a coincident economic indicator, meaning coffee purchases at the two outlets track the economy.

The Christmas season spike, when people are buying gifts, rather than coffee, appears to be the only anamoly.

Too bad Starbucks is not a leading indicator.

Starbucks Digital Network Launches

Starting July 1, 2010, Starbucks is enabling free Wi-Fi at its U.S. company operated stores, and launching the Starbucks Digital Network, which will offer unique content, including unrestricted access to paid sites such as the the Wall Street Journal, as well as content from iTunes, The New York Times, Patch, USA TODAY, The Wall Street Journal, Yahoo! and Zagat.
    
Set to debut in the fall, and offered at U.S. company-operated Starbucks stores, Starbucks Digital Network will allow customers free unrestricted access to various paid sites and services including previews, free downloads, local community news and activities.

Developed in partnership with Yahoo! and using AT&T access, the new network aims to create a unique customer experience that also deepens customer engagement.  The new plan further illustrates the public Wi-Fi business model, which frequently "gives away" the access as an inducement to support some other business model.