Payments Views


One Hand Clapping!

That’s actually two big hands clapping for Starbucks – but I’m using the one hand clapping metaphor to help make a point!

Congratulations to Starbucks for taking the lead in mobile payments in the U.S. with its announcement this morning that now all Starbucks locations in the U.S. will accept mobile payments from its Starbucks Card Mobile application (available for both iPhone and Blackberry mobile devices).

To the payments geeks here at Glenbrook, Starbucks provides a great example of bypassing the difficult chicken and egg issues associated with “two-sided markets” such as electronic payments. When you can “just do it” yourself – innovating only on one side of the market – you’re in complete control of your own progress.

Rather than waiting for the deployment of NFC-equipped mobile handsets that somehow interoperate between consumers, merchants, mobile carriers, the card networks and a consumer’s favorite card issuer, Starbucks innovated by simply not waiting.

Instead, they innovated by using applications they could develop and deploy onto mobile handsets (Thank you Apple for the App Store!) coupled with minor upgrades to the POS acceptance infrastructure (bar code scanners) in their stores. Voila – problem solved, mobile payments enabled! Starbucks notes that “more than one-third of U.S. Starbucks customers use smartphones, of which nearly three quarters use BlackBerry smartphone or iPhone mobile devices.”

Who else is innovating this way? Have you used a mobile boarding pass to board an airline flight recently? As consumers, we’re in the midst of becoming educated that a vendor’s app is there to help make things easy – including making payment easy. Starbucks notes: “In addition to the mobile payment capability, the app allows customers to manage their Starbucks Card account, check their card balance, reload their card with any major credit card (iPhone users can also use the PayPal feature), check their My Starbucks Rewards status and find a nearby Starbucks store with the store locator feature.”

Congratulations to Starbucks and its development partner mFoundry for just getting it done and not waiting for the crowd to coalesce around some industry standard mobile payments approach. There’s a whole mobile app ecosystem out there just waiting for you. So, what did you ship today?

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Andrew B. Morris
9 years ago

Couldn’t agree with you more, Scott… Congrats to Starbucks and mFoundry! Like you and your colleagues at Glenbrook Partners, I’m in the business of providing consulting assistance to clients considering their payment strategy options, including mobile payments. We talk about there being two aspects to any mobile payment deployment: 1) the mobile access technology (in the case of the Starbucks app, a 2D bar code read from a smartphone handset), and 2) the funding and settlement account (the Starbucks prepaid account). NFC is a powerful technology, but it’s not the best solution for every mobile payments use case and there are many other mobile access technologies, especially when the funding and settlement is a closed-loop, proprietary payment account such as private label credit or prepaid/gift. This is a very smart move by Starbucks and I think other retailers will follow. NFC is not the only game in town.

Jorge Chazo
9 years ago

Me neither. Could not agree more with you or Andrew. I’m a diehard Starbucks and Apple iPhone fan for a few years. When Starbucks started testing this payment option I could not wait for them to deploy it companywide, as I only visit Corporate Starbucks locations. Go ahead call me a coffee snob.
As a techie and consumer the use of mobile applications is the greatest thing since sliced bread. The convenience and streamlined aspects alone are going to change the world.