In its first major play to connect its mobile-payments service with social media, Starbucks Coffee Co. now lets its mobile payment users send gift cards to friends on Facebook.
The new application combines the features of Starbucks' general mobile application (which provides company and store information) with the Starbucks Card Mobile app. The card app, introduced in 2009, allows customers to make payments by displaying a bar code on their handsets at the point of sale.
The new combined app, so far available only for Apple devices, adds a feature that lets customers send an electronic gift card over email or Facebook for any amount between $5 and $100. Starbucks' eGifts feature, introduced in January, previously was available only through the company's website.
The app allows Starbucks' prepaid card users to reload their accounts using credit cards, signature debit cards and PayPal. The company has not indicated whether it will enable PIN-debit cards or automated clearing house transfers for mobile reloads.
"If people could reload their accounts using mobile phones through the ACH, that would be a real plus because it would increase the options for customers and cut the interchange Starbucks has to pay for credit cards," Brian Riley, a TowerGroup senior research director, says.
Riley says he sees no downside to the fact that Starbucks has created a closed-loop mobile-payment system that includes its stores plus its locations inside Target Corp. and Safeway stores.
"There's no reason Starbucks can't develop a parallel closed-loop system while open-loop mobile payments [systems] evolve," Riley says.
The most significant aspect of Starbucks' new mobile app is the ease with which younger, tech-savvy consumers can use social media tools such as Facebook to send electronic gift cards, Megan Bramlette, a director at Auriemma Consulting Group, says.
"People are getting increasingly comfortable with using Facebook for their primary communications with friends and family, and Starbucks' integration of electronic gift cards directly into the app alongside everyone's contacts and Facebook friends is a smart move," she says.
Starbucks developed the new app in response to customer requests to consolidate various features into a single app, Adam Brotman, Starbucks' vice president and general manager, digital ventures, said in a press release Thursday.
"Finding new ways to connect with our customers and elevate the experience in and out of our stores drives our continued growth in the mobile space," Brotman said.
Starbucks has said that with the addition of its Android app for mobile payments, 90% of its customers with smartphones will be able to make mobile payments.
