Starting today, my wallet will forever stay in my pocket at Starbucks. That doesn’t mean I’m going to stop buying Starbucks coffee; it means that I can finally feed my caffeine addiction using only my SmartPhone.When Starbucks Coffee announced yesterday that over 6,800 of its locations would accept mobile payments, there was a significant amount of buzz in the press. This morning, I used this service for the first time. My first impression was that Starbucks was chasing any new variation of mobile payments, regardless of its relevance. But, what may seem irrelevant today could be the basis for something highly relevant tomorrow. After using the Starbucks mobile payment product today, it seems that Starbucks is just trying to take the first step into mobile payments; they seem to believe that any small step toward mobile payments will turn into a stampede of transactions. And, they may be right.
SETUP IS COMPLICATED
The Starbucks mobile payment product is, at best, a small step toward mobile payments. At first, I was hoping that the process would require zero plastic cards. However, the process actually requires two different cards.First, if you want to pay for your Starbucks coffee using your BlackBerry or iPhone, you need to download the application. Next, you need to buy an actual (not virtual) prepaid Starbucks card, which is the first piece of plastic needed in this process. You can purchase the Starbucks prepaid card in any Starbucks location or online. If you buy it online, you can only use Visa, MasterCard, American Express, or Discover - which is the second piece of plastic required in this process. If you buy the plastic Starbucks prepaid card at your local Starbucks, you can also use cash and therefore only use one piece of plastic during the process.After the purchase of your plastic Starbucks prepaid card is complete, you need to complete the set-up by opening the app on your SmartPhone and answering the 16–digit Starbucks prepaid card number plus the eight–digit security code. Unfortunately, at this point, none of those 24 digits will be saved in your SmartPhone.
If you want all of this information to be available to you without reentering, then you have to register Your Starbucks prepaid card to your “Starbucks account” through the Starbucks SmartPhone app (or online).Don’t have a Starbucks account? Sorry, you need to create one. Just like any other account on any other website, you need to establish a new username and password. Starbucks also requires that you to enter your first name, last name, address, and you have the option of entering your birthday (so you don’t miss your annual birthday gift of a free cup of coffee). If you are like me, you need to remember another username and password about as much as you need another hole in your head, but it really is necessary if you want to use Starbucks mobile payments.Of course, you can choose not to create a Starbucks account, but that means you will need to carry the plastic Starbucks prepaid card with you, and enter the 16–digit account number and the 8–digit security code into your SmartPhone every time you want to pay with your SmartPhone at Starbucks, which would not only defeat the purpose of paying with your SmartPhone but also significantly irritate the people standing in line behind you.
THE SECOND USE IS CONVENIENT
Although the Starbucks mobile payment product is a “small step,” it clearly is a step in the right direction. When the cashier at my local Starbucks rang up my transaction, I opened the Starbucks app on my iPhone, and pressed, “touch to pay”. I handed her my iPhone and she pressed a button for the payment type “prepaid gift card” on her electronic cash register. Then, she scanned the 3-D barcode on my iPhone, and handed it back to me. That was it, the transaction was complete.The Starbucks app also allowed me to enter my credit card number; not for a payment directly to my credit card, instead I could automatically or manually replenish my prepaid Starbucks card and therefore never have to touch my wallet again whenever I walk into a Starbucks.Although PayPal is not an option to purchase the plastic Starbucks prepaid card, PayPal can be used to reload the prepaid card. However, it is a little tricky: Open the Starbucks app on your SmartPhone, tap the dollar figure (your available balance) which appears on the “My Cards” page. You will see four buttons; tap “Reload Card” and select PayPal (you may have to sign in first). Then, follow the prompts – carefully. PayPal will not confirm the amount of your purchase before completing the transaction, so hit cancel is you are not sure which reload amount you selected.
Here is an important not for the aesthetically sensitive set: pick a plastic prepaid card with a design that you like. That is because the graphic image on the plastic prepaid card you buy will appear on your SmartPhone display every time you pay with your SmartPhone. In other words, you could be looking at this graphic image for a very long time, especially if you choose to activate auto–replenishment which will allow you to use the card in perpetuity (or at least as long as your credit card is valid).In the future, I am hoping that the Starbucks mobile payment product will evolve for the better. For example, Starbucks could could eliminate the need for a plastic prepaid card, and allow a user to activate a virtual account; same number, sans plastic. Also, Starbucks could allow customers to purchase or replenish the prepaid card account using other payment types, like Boku or Obopay. Hopefully, the first thing they will do is improve the PayPal integration to allow for a better user experience (and there is significant room for improvement). In any of these scenarios, Starbucks could allow several additional payment types to its mobile users without changing its ECR/POS system or requiring any new training for Starbucks employees.My bet is that Starbucks will use this new channel as a basis for introducing other forms of payments, new technology like Near-Field Communications (when it is in all of our phones), and to redefine their connections (read: marketing, loyalty and retention programs) with their customers through the same Starbucks mobile application that is used for their mobile payments program.Starbucks has taken the first small step; time will tell if it leads to a stampede or just a long stationary line.
[NOTE: Thanks, @tek_fin!]
Author: David W. Schropfer
Published: January 20, 2011
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