Payment Evolution and its experimentation at Starbucks

In 2009, Starbucks achieved a technology breakthrough by launching a mobile card app on the app store for Starbucks Card customers. The mobile app showed a customer their current balance and also could be reloaded through any of major credit cards. As part of the pilot study 16 stores participated in this program.

In 2010, Starbucks introduced a mobile app and tied it to its loyalty program. The program was first introduced in Seattle and San Francisco and was later rolled out to other outlets in the US. Over the time, the program was completely functional in its 6800 stores in the US.

Starbucks measured that 1 in 5 transactions were made using the loyalty card, that were more than 1/3rd of its customers who owned smartphones, & that three-quarters of those people used a BlackBerry or an iPhone. Starbucks took in a whopping $1.5 billion on Starbucks Cards in 2010, a 21% increase in sales revenues over 2009.

Source: Starbucks

In 2012, Starbucks invested $25 Million in mobile payment company Square. Through this initiative, Starbucks started accepting payments with Square Wallet app. The Square Wallet program was launched in approximately 7000 stores. Square Wallet not only acted as a transaction mechanism, but also gave a user transaction history, menu options, nearest store location, option to explore nearby businesses etc. The Square Wallet had evolved from just being a payment app to an intelligent payment app which engaged the user in exploring option and educating simultaneously.

In 2013, Starbucks revealed that more than 10% of its transactions were through mobile payments. Interestingly over 30% of its U.S. transactions were made either using mobile or plastic version of Starbucks card.