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Starbucks spurs mobile payment growth with app extensions

Starbucks is expanding its mobile payments footprint geographically with the launch of the Starbucks App for Android in Britain and Canada. Additionally, the coffee house chain is refreshing its Android app in the United States with a widget, PayPal support, PIN code protection and the ability to view a rewards history dashboard.

“Starbucks has created an in-house branded mobile payment system that is easy to use, can be reloaded online, and rewards consumers by tracking loyalty points,” said Wilson Kerr, vice president of business development and sales at Unbound Commerce, Boston.

“It’s easy to see why they are expanding internationally, as I imagine they have proven that their system lifts sales,” he said. “More importantly it provides Starbucks with invaluable data on who is visiting their stores, when and why.

“Starbucks has quietly become the gold standard for others to follow in the mobile payments space. Of course paying for a $4 cup of joe is not necessarily the same as paying for a higher-prices item, but there is still a lot to be learned from their success.”

Mr. Kerr is not affiliated with Starbucks and spoke based on his experience in mobile.

Starbucks did not respond to press inquiries.

An early success story
The Starbucks mobile payments app was launched in early 2011 and by April of this year, the company was reporting that it had processed a total of 42 million payments since the app’s launch.

Additionally, mobile payments are now accepted at nearly 14,000 Starbucks locations worldwide.

While the expectation is that mobile payments will play a significant role in consumer purchases going forward, Starbucks is one of the few big success stories in mobile payments so far.

One of the reasons for Starbucks’ success is the fact that the app enables payments through a 2D bar code that is displayed on a user’s phone. The technology is easy to use for consumers and easy to implement at the chain’s locations.

In contrast, NFC – which has been the focus of a lot of attention in mobile payments – is taking longer to catch on than some may have expected in part because there are not enough contactless point-of-sale devices or NFC-enabled handsets in the market. As a result, NFC-based mobile wallets such as Google Wallet are reportedly struggling.

A broader reach
With Britain and Canada, which are two of Starbucks most important markets, extending the Starbucks app to the Android platform in these markets will enable the coffee house chain to offer mobile payments to a significant number of new customers.

“Android-powered devices like the Samsung Galaxy line are giving the iPhone a real run for the money,” Mr. Kerr said.

“No longer can apps only cater to iPhone users and I suspect Starbucks was receiving complaints,” he said. “Android’s installed base is actually five percent points higher than Apple’s.”

An iPhone version of the app was launched in Britain in January and in Canada late last year.

Customers who download the official Starbucks app for Android in Canada and Britain will be able to access a range of features including Starbucks Card mobile payments, a store locator, My Starbucks Rewards stars, check and reload their balance, PIN code protection, a new widget and be able to transfer their balance.

The Android app has also been updated with several new features including the ability to pay and reload the Starbucks Card via PayPal through the Starbucks App for Android. This feature is only available in the U.S. and Canada.

Another new feature is the ability to activate a widget enabling users to quickly and easily view their balance, their My Starbucks Rewards star count, a store locator and the Touch to Pay icon.

Starbucks has also added PIN code protection to the app.

“Most merchants I talk to about online mobile commerce are in research mode on in-store mobile payments because implementation is not easy,” Mr. Kerr said. “Still, the potential is real and, after they have their ecommerce sites mobile-optimized, merchants should be researching mobile payments.”

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