Starbucks Corp. plans to ride the U.S. success of its in-store mobile-payment method by introducing the application to customers in the United Kingdom and Ireland on Jan. 5, the Seattle-based company announced Nov. 24.
The application, usable only with the Apple Inc. iPhone or iPod Touch, enables consumers to purchase a cup of coffee or other products when the clerk at the point of sale scans a barcode displayed on the device’s screen.
More than 700 Starbucks locations in the UK and Ireland will offer the mobile-pay capability, the coffee maker stated in a press release. Starbucks has some 1 million loyalty cardholders in the region, the company stated.
Starbucks officials could not be reached to comment on the initiative or on whether other devices eventually may support the application.
The application essentially transforms the customer’s prepaid Starbucks loyalty card information into a mobile-phone application. It also speeds the payment process, trimming 10 seconds or more for each transaction, Bruce Waring, vice president of marketing for Starbucks UK and Ireland, said in the release.
The company felt it was important to develop a faster payment process because customers provided feedback in company surveys indicating they would like a quicker way to pay for their coffee, Waring said.
“We have created our own custom-built mobile-payment technology rather than wait for the Near Field Communication technology, which currently is not widely available,” Waring said.
In addition, the application helps customers manage their accounts, receive information about product offers and locate other Starbucks locations, the company added.
Starbucks launched its mobile-payment application for smartphone users in the U.S. market in January (
The full U.S. launch staged at 6,800 Starbucks locations resulted in more than 20 million mobile-payment transactions in the first 11 months, the company stated.
The application’s popularity among Starbucks patrons in the U.S. fueled the company to a record high number of sales through loyalty cards during its quarterly earnings report in July (
Starbucks’ decision to bring its mobile-payment application to the UK and Ireland makes business sense, Zil Bareisis, a London-based senior analyst for research firm Celent, tells PaymentsSource. But the application will have limited impact on the UK mobile-pay market because it is a standalone application for a single merchant, he contends.
However, the application provides “another step towards educating consumers [about mobile pay] and getting them used to using a mobile phone at the point of sale, which is a positive trend,” Bareisis adds.
In an August report about mobile-payment methods and services, Bareisis indicated the success of the Starbucks Card mobile application would be difficult for other companies to replicate.
Starbucks has control over the point-of-sale hardware and software, as well as the customer account enrollment and service, meaning it does not have to share revenue with another company, Bareisis wrote in the report.
The company also has a loyal base of customers, many of whom own smartphones, with a daily purchasing habit, Bareisis added.
In addition, while the closed-loop card requires a dedicated application, its development does not need as much industrywide coordination, the report suggests.
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