Phones

Hands On With the Starbucks Mobile Payments App

Last week, Starbucks announced the nationwide rollout of the mobile payments app it developed with mFoundry, which uses 2-D barcode technology (see example below) to allow your iPhone or BlackBerry to emulate a Starbucks card at the counter. Ironically, although I have been writing about mobile payments since 2002, this was the first opportunity I have had to actually complete one in the real world.

Fortunately, Starbucks decided they would support the BlackBerry, which is the only model my company supports; otherwise, I'd still be waiting. One of my continuing gripes has been the refusal of most mobile payment companies to support the BlackBerry, despite its large installed base. I got a sense during my trial of why this is the case: getting up and running with the app was the most difficult part of the process. To begin with, the app is not available through the BlackBerry store, and the link from the Starbucks.com website crashed my mobile browser. As an analyst, I have access to resources most consumers do not, and after a quick e-mail to the CEO of mFoundry, I got a working link to the download site.

Once the app was finally installed, I had to reboot my device. Not exactly the best customer experience. BlackBerry clearly was not designed with apps in mind, and I'm sure programmers hate working with it, not to mention customer service people and CEOs of mobile software makers.

Why is the app not on the BlackBerry app store? Part of the reason may be that the app doesn't work on its own. You have to buy a Starbucks card from a store, then enter the card number and PIN into the app. There is no way to generate a new account from within the app. Presumably, Starbucks is marketing the app to its existing card customers, and providing them with the link I received directly. You can reload a card from within the app, but you have to get one first.

That's an interesting example of how existing information systems can restrict the application of new technology; either Starbucks never thought of allowing people to generate virtual cards, or (more likely) its existing IT systems can't support it.

The rest of the story is less interesting: the purchase process was very smooth, and the app did exactly what it was supposed to do. As it is, the app will have a limited effect on my own behavior; it doesn't make the coffee any better (I prefer good old Dunkin' Donuts), and I didn't get any sort of discount or reward for using it, beyond the fun of doing something neat and high-tech.

If the app evolves to include offers and incentives, or other merchants start to accept it, then it would be more influential.My experience did convince me that this technology is much more likely to succeed than NFC contactless in the US. It can work with any smartphone, and any standard optical scanner. Distribution can be entirely over the air; no removing batteries and installing microSD cards, no custom cases, no extra chips. If the barcode format can be made into a standard, then any merchant (or bank) could use it. Person-to-person payments could be done using the smartphone's camera as a scanner.

Finally, the fact that Starbucks has rolled it out nationwide gives it a tremendous first-mover advantage. Banks should be paying close attention.

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