Starbucks Debuts Mobile Payments

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Early next year, coffee supernova Starbucks (Stock Quote: SBUX) will roll out a new mobile payment system nationwide after successful trial runs in New York, California, and Seattle.

In a note to customers dated Nov. 1, product manager Chuck Davidson said that the Starbucks mobile app is up and running in 300 Starbucks locations in New York, and also 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 barcode on their screen that they’ll hold in front of a 2-D scanner on the counter to pay for their purchase.”

The trend in mobile payments is a strong one. According to the 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, research director with Aite Group and 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 smartphones as their mobile wallets,” said Brady Brewer, vice president of Starbucks Card and Loyalty. "We’ve heard from our customers that they want a faster, more convenient way to pay.”

The coffee giant says that 71% of its customers use either an iPhone or a Blackberry. Stores that have implemented the mobile app program say that usage 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 that the company is already seeing evidence that customers will switch from using Starbucks cards to the digital app – a move the company plans to welcome with open arms.

“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.

MainStreet examines whether mobile payments are safe and offers tips for banking on your cell phone.

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