A few days ago I was sitting in the drive-thru line at my local Starbucks impatiently awaiting my turn at the window. I needed a chai tea, and I needed it bad. Then I saw it. A woman reached out of her car, smartphone in hand, and waved it at the barista at the window who was wielding a scanner. This was a momentous occasion for me. It was the first time I'd seen someone actually use a mobile payment solution in person.
I assumed this was all thanks to Apple Pay, but now I'm not so sure. Starbucks announced its quarterly earnings on October 30, and as it turns out, its mobile app is a star. The app is expected to process $2 billion by the end of the year, and Business Insider says about $517 million of that is from mobile payments. This may not be a surprise to loyal customers, because Starbucks has been making a big play in the mobile space. According to CEO Howard Schultz:
"By way of example in September, we launched our new Starbucks app for android with Shake to Pay functionality in the U.S., U.K. and Canada and also digital tipping in the U.S. as Starbucks iOS app now has Uber integration, enabling customers to click on a ride to their local servers.
But perhaps the single most important technology innovation, we will introduce this year is Mobile Order and Pay which debuts in Portland in December and will be rolled out nationwide in 2015. And while many people are talking about Mobile and Pay, what Starbucks is going to do and execute is quite different than anyone else in the market place."
Starbucks will allow mobile users to place their order ahead of time and pick up that order without having to wait in line. Everyone wins.
Here's the thing Starbucks has figured out about mobile payments that many companies still haven't. It's about convenience. I can go anywhere with cash, or my debit card, and make a purchase. If I'm lucky, I might be able to use Apple Pay-or a similar service- at a handful of places on my regular shopping route. What's the point of using Apple Pay if I can use it at Target but not at Petco? This is not helpful. But if you're a regular Starbucks customer and you can now do everything from your mobile device--whether that's order or pay--and shave a few minutes off your morning wait for caffeine, this is very helpful. It provides enough value to keep you from stopping on a competitor's coffee shop.
(Image courtesy of Shutterstock.)