Starbucks has felt the caffeine buzz from its bar code-based mobile payment app for the iPhone and BlackBerry smartphones for several months. Beginning Wednesday, the app will be extended to include the Android platform.
The coffee giant also plans to add mobile payment capabilities to Starbucks shops in 1,000 Safeway stores, bringing the number of places where mobile payments work to nearly 9,000 in the U.S. That number includes 6,800 company-owned Starbucks and another 1,000 locations inside of Target stores, said Chuck Davidson, category manager for innovation on the Starbucks card.
Davidson said that Starbucks has done so well with its mobile payment app -- a reader in the store scans barcodes displayed on smartphone screens -- that it doesn't make sense to wait for the arrival of Near Field Communication (NFC) mobile payment technology.
"Having NFC readers [inside stores] is not the issue; it's [having enough] NFC [chips] in the phones, which we believe is two-and-a-half to three years out," Davidson said in a conference call with reporters.
Davidson said Starbucks saw 3 million mobile payment transactions in just nine weeks when the iPhone and BlackBerry apps were launched earlier this year, though he didn't provide more detailed information. "That's a big number in a short period of time, which we achieved with no complaints and no training issues," he added.
Starbucks did plenty of preparation for the mobile payment system, building on its successful Starbucks card, he said. The card originally began as a gift card and now allows users to pay by phone quickly at a bar code scanner. It can also be used to reload dollars to the card from any major credit card and to check Starbucks Rewards for winning a free drink and finding nearby Starbucks locations.
Davidson said Starbucks has been the mobile payment innovator in the U.S. and has found that Americans will pay with their phones. "We're it, we're the test case, and we're seeing tremendous value," he said.
Moving to the Android is important because "Android is huge," he said.
Originally, Starbucks surveyed customers and found they wanted to be able to use an iPhone or BlackBerry for mobile payment; now they're clamoring for that capability for Android. Noting that the smartphone market changes almost monthly, he said, "Android is a huge growth opportunity for all mobile, so we're happy to be part of that now."
Along those lines, Davidson said Starbucks thought at first that "only trend folks with iPhones" would use the mobile app to buy drinks and food. "But we see now it's kids, old folks -- all over the map," he added. "We're surprised to see how broad the usage has been."
Davidson has visited many stores and watched as soccer moms and office workers paid by phone. "They don't have to dig around in a purse," he said.
He declined to disclose many details about mobile payments at Starbucks, including how many customers use the service or what the average purchase is by smartphone.
While he wouldn't disclose future plans for the system, he did say the retailer has considered allowing smartphone users to form a separate line to pay. Today, all customers line up together to order and pay.
Davidson said that paying by mobile is faster than by other methods, and demonstrated how fast the free Android app is to use. Users will touch a button on the screen of the phone to pay, then scan a bar code that is presented on the phone display and then click once more to finish when they will see the total left on the Starbucks Card on the phone display.
With the assistance of MFoundry, Starbucks was able to build a completely different app for Android that works with Android 2.1 devices and above across various hardware manufacturers, Davidson said. The Android app is not a duplicate of the app on the iPhone he said, although it functions in a similar way.
"On Android, we have to make sure it worked efficiently with the home button and back button, optimizing what we had," he said.
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