November 7, 2013
No single competency is enabling us to elevate the Starbucks brand more than our global leadership in mobile, digital and loyalty. Starbucks is a clear leader in mobile payments and we are encouraged by how consumers have embraced mobile apps as a way to pay.- Howard Schultz
Over Four Million Mobile Wallet Payments Per Week
While most of the world was getting ready for Halloween celebrations Starbuck announced that now 11% of sales volume comes through its own mobile wallet . This is just a staggering amount of transactions for a single retailer, about four million mobile payments per week, and eight million consumers are using mobile apps to pay. Howard had some of the most strongest words I have heard supporting mobile payments by a retailer.
The Courage To Innovate
On a nice spring day early in 2009, Starbucks launched its mobile card app in 16 stores. It was so successful it rapidly expanded the program nationwide by allowing consumers to pay by letting patrons display a bar code to be scanned at the point of sale. This was the genius work of Benjamin Vigier and his team. Benjamin now heads up retail payments for Apple and we will likely see the results of his 3+ years of work at Apple very soon.
Benjamin took the very simple QR code and inverted the use case that most companies were using. By allowing the register to scan the QR code rather then the user scan a QR code. This was a maverick move at the time as most technologists were laughing at the QR code and the way it was used.
Benjamin built this systems years before there was a Square wallet, Clinkle, PayPal Wallet or just about any other system. It is successful for so many reasons that would take a book to cover.
Howard Schultz Resigns From The Square Board On The Same Day As This Announcement
Interesting is that just after this announcement Howard Schultz resigned from the board of Square . It is not very clear how this will impact the future relationships, however it is clear that less than <.01% of mobile transactions at Starbucks is generated by Square at this point. There was also a very ruff start with Square Wallet users not being able to use the system and not being able to gain points in the Starbucks loyalty program. Insiders at both Square and Starbucks are very disappointed by some of the ways the relationship has played out. There may be some material changes announced in the next few months.
New Advanced Starbucks Wallet
Starbucks will introduce a new version of the wallet in 2014 and it will have dozens of new features including add mobile ordering and digital tipping. However the big news will be the technology that will be deployed and the new partnerships that Starbucks will announce. I can say at this point that it will be quite spectacular. I predict by the end of 2014 over 25% of transactions will take place through Starbucks new mobile wallet.