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Paul Penrose - Finextra

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Starbucks serves up caffeine on the iPhone

24 September 2009  |  10428 views  |  0
Coffee chain Starbucks is to begin pilot trials of a new application which enables loyalty card holders to pay for their purchases using an Apple iPhone or iPod touch.

Will that be cash, plastic or iPhone?

25 September 2009  |  5641 views  |  15

Hip-to-the-moment TechFlash blogger John Cook shows just how easy it is to use your iPhone to buy a grande non-fat mocha in this video shot at the Seattle Columbia Center Starbucks.

So why not just use a card?

John looks slightly confused by this question, before retorting:

"Because its so cool to use an iPhone man to buy your goods."

That's some business case you've got there John. It may ring true in downtown Seattle, but it doesn't cut much ice on my local high street.

TagsPaymentsRetail banking

Comments: (17)

Elizabeth Lumley - Finextra - London | 25 September, 2009, 16:10

I wouldn't be so dismissive, Paul. The popularity of the iPhone is that you get apps, music, email, text, phone etc...all on one package. If the iPhone lives in your hand, why then not just use it for payment as well?

If the iPhone (or Blackberry or any other smartphone, really, let's be honest) were the reserved for young hipsters it would have gone the way of mullets and retro airplane bags.

Payments are just another app to be added to the menu.

Paul Penrose - Finextra - London | 25 September, 2009, 16:52

Agreed. Mobile payments are the future, no doubt about it; but it has to be as easy and painless as cash. Scrolling through a menu of multiple proprietary apps to pay for your coffee may enhance your cool in geeksville, but for us retro-luddites it just seems a bit like hard work.

Gerhard Schwartz - Hewlett-Packard - | 28 September, 2009, 08:01

Mobile payments are great if payer and payee are remote from each other, or if the payee (eg. a private person) has no infrastructure to support a card payments transaction. At Starbucks, such transactions make no sense whatsoever other than satisfying an individual desire to show others that this person has a smart phone and is even capable of operating it - real "cool" ...

In reality that person acts discourteous versus the others waiting in line to get their coffee. The shortest service times are still achieved when paying cash, a good and secure alternative would be anonymous prepaid cards where such small payments are handled offline.

John Doyle - FSS Technologies UK - London | 28 September, 2009, 08:59

Typical dismissive comment from Paul; but the reality is that people want choice.

Consumers take with them the most appropriate method of payment depending on their circumstances and carrying a card is not always the most convenient.  It's like Guy Kawasaki said at SIBOS, kids don't have watches anymore, they use their phone.  We are raising a generation of young people who just want to carry their phone; not a pocket full of cards and cash.

Paul will probably champion the return of cheques next!

Steve Liles - Sheffield Computer Systems PL - Sydney | 28 September, 2009, 09:13

Oh sh*t!  Sorry everyone but the battery on my iPhone has died.  Can anyone spare a few dollars for my decaf soy latte coffee please?

Paul Penrose - Finextra - London | 28 September, 2009, 09:40

What's wrong with cheques? (Sent from my typewriter)

Ainsley Ward - Clear2Pay - Diegem | 28 September, 2009, 10:53

In the western world we have an increasingly aging demographic - which basically means that the world of consumers is becoming increasingly top heavy. With no offence intended to seasoned silver surfers out there, surely this continual pursuit of ways to pay that serve no purpose other than being 'cool' is the reason why cash is still used for the bulk of our purchases.

Perhaps the NBT should be some sort of walking stick based payment device or something else that resonates with those that actually remember not being at Woodstock.

It's fine going after 'the kids' if you are building something for 30 years time, but to capture the here and now it's more important to look at how to bring the luddites into electronic payments, how to secure the infrastructure without scrolling through 20 apps on an iPhone, and more importantly, how to pay for your bingo and still see how much change you have for a port and lemon in the interval.

Dean Procter - Transinteract - Sydney | 28 September, 2009, 13:34

While I admit to being a mobilisation evangelist it'll take a little more that a double espresso and four sugars to get me hyped up about this one.
Back in school I studied something called mathematics and then later marketing and I retain from that 'share of wallet'.
Now using mathematics and share of wallet I figure that the business model which relies on consumers storing value ie, putting their hard earned cash into every store's card, along with the tollway, transport tickets and now Starbucks - is a dead-end model. Has anyone else thought about this without the hype?

The other mathematical thing that occurs to me is 'how many apps can you possibly fit on an iphone? Ok so its infinite, doesn't that mean it'll eventually be a pain in the eye for the consumer shuffling through all those apps, because after all the maths says they all can't be in the front of screen and mind all the time.
I can of course see the wildly optimistic scenario that I can only assume has been presented to get this sort of thing wings.
On another level it is of course only a little spend on spin after all.

It really makes you me wonder.

Attila Paksi - ApPello Ltd. - Budapest | 28 September, 2009, 15:11

I agree with most of the things mentioned above by others.

Do not forget, that we (meaning people from our age groups, ranging from let's say 35 to 130...) are not any more the main target group for lots of products/companies.

They try to attract the youngsters, who have a purchasing power (mosthly through the parents of course), and where the coolness factor is actually on top if its about making them accept a new service or sulution...such as payment through a mobile...and especially through an iPhone! :)

Dean Procter - Transinteract - Sydney | 28 September, 2009, 16:38

Gerhard I am forced to disagree with you on the mobile payment taking longer than cash except in this poorly thought out and executed example. In almost infinite ways you are wrong about mobiles taking longer than cash but I'll stick to what you may be familiar with in order to illustrate it.

Even assuming you're using a slow transaction method like an iphone app or whatever and it takes ages surely 50 people waiting in line could pay for a coffee simultaneously with an intelligently designed system? (which Starbucks is I think not)

Just because you haven't seen one doesn't mean that it couldn't be infinitely faster with people using their mobiles.

As for this example they could just as well be using their camera or a digital picture frame to pay, it is not really about mobiles is it? You could even charge up your digital picture frame by handing $20 over the counter or via card on the web or your anyphone (Starbucks would make more profit from the former)

The whole process seemed a little clunky to me and the customers have to line up and scan? Doh!

The iphone system is definitely in the have a nap while it happens class. It really is low budget cheap spin rather than something that adds real value and profits to the business.

Attila Paksi - ApPello Ltd. - Budapest | 28 September, 2009, 16:46

Oh yes, and I say this even despite the "aging western world", because make no mistake: (for instance) Asia is coming up as far as the spent money and the number of users is concerned.

Aldon Hynes - Toomre Capital Markets - Woodbridge CT | 28 September, 2009, 20:55

I started to write a comment here, but it rapidly turned into a long blog post which I've put up on DigidayDaily and Orient Lodge

It starts off:

The latest Starbucks apps for the iPhone is generating interesting comments on several different fronts. It seems as if there will always be innovators and early adopters trying out new technology when it comes along, even if it doesn't provide immediate benefits, in the hopes of some future benefit. There will also always be laggards and late adopters criticizing them.

I do not have an iPhone. It is too closed of a platform for me. I still use a fairly old rather dumb mobile phone. However, I have changed my habits even as a result of this older mobile phone. I take pictures and videos from my phone and send them off to sites like Flickr, Facebook and YouTube and I send text messages to many different systems.

So, when people ask, "Why not just use a card?" in response to the latest iPhone Starbucks app, I have to ask, why not just use a human teller instead of one of those new fangled ATMs?

 

I encourage people to stop by at either site and read the rest of the post and share your thoughts.

Dean Procter - Transinteract - Sydney | 29 September, 2009, 02:04

Steve - that's a great idea. I'll try it next time I'm in a Starbucks full of iphoners. Will I need a dead one in hand? - If you are there and perk up first with the grift I'll quickly pull the battery out of my iphone so you can borrow some power....and perhaps shout me a coffee?

Chris Barry - V2 Innovations - Raleigh | 30 September, 2009, 16:12

Takes the same amount or a little more time to pull the iPhone out and pay with it versus a card swipe - however I think the value lies in the opportunity to payback the customer with interactive marketing e-coupons, points, loyalty stuff, games example - being Dean's "comment shout me a coffee" similar to Facebook games like giving a friend a beer however in this case the gift is redeemable at a participating store. It opens up a new world centered on the simple act of making a payment.

Dean Procter - Transinteract - Sydney | 30 September, 2009, 16:24

Chris, these points you make are good, but couldn't they also be delivered in a way that focuses primarily on the immediate needs of Starbucks customer at their most testy moment - when they're waiting for that (very precise choice in their) coffee fix?

Andrew Muir - SWIFT - | 30 September, 2009, 18:14

We, the human race, spend crazy amounts of energy solving the wrong problem. This story reminded me how much I believe this.

When in Starbucks, I have been struck by several desires. Amongst those I am prepared to admit to here, are:

- I really want to be able to buy a regular brewed coffee in a container smaller than an industrial bucket;

- If I'm ordering a brewed coffee and a latte, I'd rather pick both up from the same counter (honest - you can't)

- I really wish it was possible to empty used coffee grounds from the coffee machines without the crashing and banging...

However, I have never found myself wishing for a way to use the internet and a very expensive handset to replace a quick, simple, cheap, reliable and secure transaction using notes and coins.

 

Steve Liles - Sheffield Computer Systems PL - Sydney | 01 October, 2009, 02:17

No but seriously, paying for your Starbucks by iPhone could save your life...imagine if the health warnings were electronic and because you had gorged on twenty krispy creme doughnuts and four supersize Starbucks coffees already that morning...the warning would trigger a "NO PURCHASE! THIS GUY IS ABOUT TO DIE!!  CALL AN AMBULANCE!!!".  Now that would be a worthwhile reason to mandate paying by iPhone only!  Except...maybe Starbucks would still want to sell more rubbish to the addict? Yep, I think that put's the kybosh on that one.

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Paul Penrose

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Finextra

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