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What Is Starbucks Brewing For Mobile Payments?

Feb 4 2014, 2:18am CST | by

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What Is Starbucks Brewing For Mobile Payments?

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What Is Starbucks Brewing For Mobile Payments?

Why do we still have credit cards?

With all the advances in technology, and all the things our smart phones do, why aren’t we paying for everything using a mobile app? Why are you signing a paper restaurant receipt after paying for dinner? Why am I sliding my card through the reader so I can fill my tank? Why do we have to present a little piece of plastic when we check in to a hotel?

There are many, many choices of mobile payment apps. But most of us are still using credit cards, right? No one company has emerged as a leader. Thankfully, that’s going to change. Soon. Why?

Starbucks. I believe that Starbucks will be the disrupter of the mobile industry. Starbucks will be the kingmaker. Starbucks will decide who becomes the biggest player in mobile. Maybe it will be Apple or Google Wallet or PayPal or Square . Or someone else. We shall see.

An organization shift last week explains what’s going on: the company’s Chief Executive Howard Schultz will expand his role in product innovation and digital retailing as part of a shuffling of senior executives aimed largely at adjusting to technology-driven shifts in its industry. As part of his new focus, Mr. Schultz plans to work more closely with Chief Digital Officer Adam Brotman and Chief Strategy Officer Matt Ryan on what he calls “next generation (of) retailing and payments initiatives.”

The company has close to 18,000 stores operating in more than 50 countries. You go to Starbucks. I go to Starbucks. For most of us it’s not really about the coffee. It’s the convenience. It’s the consistency. It’s the ambience. It’s a Wi-Fi connection. It’s a familiarity. It’s a comfort. The average Starbucks customer visits the store six times per month while the heaviest 20% of customers go to Starbucks at least 16 times per month. And now we learn that the company’s most senior executives are focusing on “the next generation of retailing and payments initiatives.”

The coffee store chain is the perfect pilot study for getting mobile right. And it’s obviously a priority for the company, given their latest reshuffling. Starbucks already has a mobile payment app. But most of their customers, including me, don’t use it. I’m not sure exactly why. They need, and will develop, something better, more compelling, easier, simple, fast. Something that all of their customers (including me) will use because it’s a no-brainer.

This will happen. And once I’m sold, and I’m using their mobile app to buy coffee then it won’t be long before other big chains will want me to be doing the same thing. This will then filter down to small businesses. The mobile payments industry needs a huge company to adopt and then standardize a process and that will company will be Starbucks. My hunch is that they will invest in existing technology (they already partner with Square but PayPal, Apple, Google and others all have great options as well) rather than developing their own.

Within the next few years we will see credit cards disappearing. Our transactions will be done using our mobile devices. And if you run a business it will be necessary for you to take our money this way. Millions of dollars in venture capital are being invested in mobile payment solutions. Even today, more than 20% of payments are already being conducted with a mobile device using popular apps from services like Square and PayPal. Google Wallet may emerge as the provider of choice. Apple’s “next big thing” may turn out to be a mobile payment solution.

But it will be Starbucks who makes the call. They have reorganized themselves at the very top to do this. They are going to determine how we will be using our devices to buy coffee. And as a result they will determine how other retailers will sell us jeans, orange juice and movie tickets too.

Besides Forbes, Gene Marks writes daily for The New York Times and weekly for .

Source: Forbes


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