One of the most significant recent innovations in mobile payments was announced in September when mFoundry teamed up with Starbucks to introduce an iPhone app called Starbucks Card Mobile. The Starbucks program, which is being field tested at 16 Starbucks locations in Seattle and Northern California, utilizes a 2D bar code system from mFoundry which enables latte drinkers and other customers of the Seattle-based chain to pay for their orders using mobile phones at the point of sale.

Starbucks customers are testing the application using Apple Inc.'s iPhones and iPod Touch devices to pay for items using a checkerboard square image on their screens. The images perform like standard bar codes and work with all Starbucks prepaid cards. Starbucks customers can reload cards and check balances while standing in line.

The Starbucks partnership "is very relevant to banks because it shows an ability to leverage this technology into other vertical markets," says Drew Sievers, co-founder and CEO of Larkspur, CA-based mFoundry, which also counts Citigroup, BB&T, PNC Bank and Zions Bank as customers.

Sievers says the Starbucks deal represents the first national deployment of a mobile gift card that delivers real-time balance inquiries, real-time transaction histories, the ability to consolidate multiple gift cards from the same merchant, reload and auto-reload functionality and pay at the point of sale capability. mFoundry's elegantly simple 2D technology also winnows down the multiple participants needed to execute a typical near-field communications transaction to just mFoundry and the merchant, Sievers adds. He says the Starbucks deal is the first of other merchant agreements mFoundry plans to land by the end of the first quarter.

"One of the things I like about the company is that they're finding ways to exploit going beyond mobile banking to mobile payments," says Mark Schwanhausser, an analyst at Javelin Strategy & Research in Pleasanton, CA. "Many banks see the big payoff from mobile banking to mobile payments. The bigger picture plays are going to be in mobile payments."

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