The Real Reason Starbucks Is The Leader In Mobile Payments

Of the millions of people who frequent the thousands of Starbucks stores on a daily basis, they all walk in with the same expectations – a simple experience and their daily beverage made perfectly to their satisfaction and delivered within minutes.

With blurry eyes and jitters, every Starbucks loyalist knows that the never-disappointing pick-me-up is worth the trip. But, what is disappointing is being the next customer in line while the person in front slowly orders a drink (or three) and pays with a handful of mixed coins while chatting it up with the Barista.

Even worse is being “that guy/girl” with the mixed change. But, that can all be avoided.

With 315 billion global smartphone users and a reported 32 percent who are using digital wallets through those devices, why not join the crowd and use the widely successful Starbucks payment app? This app that has lead the way in transforming the business of money exchange by adhering to two main factors: collecting data and simplicity.

Data collection

The origination of the app is detailed by John Sims, President, SAP Mobile Services, in this video.

The founding idea was that 40 million people had access to a Starbucks gift card and when the card values were redeemed, Starbucks didn’t know much about the people behind the cards. Every swipe was a lost opportunity.

The end goal was to find a way to easily capture the customer data.

The Starbucks payment app was created to integrate these 40 million cards into a mobile space where data can be collected on the identities of the individuals, what they are buying, and where they are buying – all data that could be used by Starbucks for customer retention and acquisition strategies.

Simplicity

The second founding factor was simplicity. When Starbucks launched the app in 2011, they used a simple barcode for the transactions and stayed away from using newer technologies such as near-field communication (now used by Apple Pay). This decision was made to keep the ease of use as a top priority to ensure customers would adopt the app.

And so they did. With 12 million active users totaling 16 percent of Starbucks’s 47 million weekly transactions, the barcode app is among the leaders in mobile payments.

Ease and simplicity

The themes of ease and simplicity continue to resonate through the mobile payments industry.

LoopPay, the mobile payment service recently purchased by Samsung (and could be a future competitor for Apple Pay), uses “simple, widely compatible copper loop technology to stimulate the coding in your credit card’s magnetic strip…[and] relies on the existing credit card system,” as pointed out an MIT Technology Review article.

In comparison, Apple Pay has an easy interface making it simple to use since it integrates with the pre-installed Passbook app, but the infrastructure is different and is not as widely accepted at retail terminals.

Both payment apps, however, focus on making the taps on your smartphone and in-store scans easy and simple.

The future

While the mobile payment and digital wallet industries aren’t necessarily in their infancies, they are still working toward adoption and will be continually evolving to revolutionize the industry and change the market of money exchange. Rest assured that there will be new and improved options that will make using your smartphone for purchases easy and simple.