Living with credit, New products

Starbucks’ mobile payment app sees explosive growth

Matt Schulz
Millions of people have made purchases at Starbucks using just their smartphones, the coffee mega-retailer said.

That announcement was made at the company’s March 23 shareholder meeting, according to multiple reports, and is perhaps our strongest indication yet of people’s appetites for using mobile payments to buy everyday items. But it’s just the latest example of the continued mainstreaming of mobile payments.

More than 3 million people have paid using Starbucks Card Mobile. The app, available on iPhones and other smartphones, was tested in a few stores late last year, but was rolled out to nearly 7,000 stores in January.  It allows you to call up your Starbucks card’s barcode and scan it to pay for your grande chai latte. The cost of your purchase is then deducted from your card account, and your new balance is shown.

Here’s a demonstration of how it works:

Earlier in March, Square — a small device which turns any mobile phone or tablet into a credit card reader — said it is now processing more than $1 million a day in mobile payments. Square founder Jack Dorsey tweeted the news just days after the company said it would drop the 15-cent-per-transaction charge for businesses that use the service. That move, along with the continuing meteoric growth of smartphones throughout the country, bodes well for the device which can allow everyone from a giant retailer to a person running a garage sale at their house to accept credit cards. (Want to know how it works? Our video, “How to accept credit cards at your next garage sale,” walks you through how to use Square.)

However, Square isn’t the only company offering those services, which Editor-in-Chief Dan Ray found out firsthand this month at the South by Southwest Interactive (SXSWi) conference here in Austin, Texas. Intuit has a similar product called GoPayment and enlisted pedicab drivers, food truck owners and others in Austin to help get the word out during the huge tech conference.

It all added up to Dan getting a free ride from Spike, the pedicab driver. (You can meet Spike in the video below.) The catch: Dan had to follow @gopayment on Twitter to get a so-called “magic word,” and then tweet about the ride afterward.

Dan described his experience this way:

“Spike, the pedicab driver, used the GoPayment device plugged into the top of his iPhone to earn $10 for giving me a five-minute ride from the convention center to the Sheraton. I had to say the magic word — ‘Giddyup’ — and then tweet ‘@gopayment thanks for the ride, Spike’ so there was a tweet with his name in it. Then he swiped a special card in the Intuit device, and said, ‘Cool, I just made 10 bucks.'”

While this pedicab stunt ended with the close of SXSWi, the rapid growth of mobile payments is showing no signs of slowing down. New payment options are rolling out on a daily basis. Financial institutions are turning much more of their focus to mobile payments. Companies from Google to Apple to Visa and beyond are reportedly plotting their next moves regarding mobile payments as smartphones, tablets and other mobile devices keep flying off the shelves.

Add it all up and one thing’s clear: Soon, paying with your mobile device at restaurants, retailers, garage sales and even pedicabs will be no more unusual than starting the day off with a cup of coffee.

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  • Spike was cool. And just so you know I’m not a total geek and jerk, I did tip him. Old-fashioned cash.

  • Dirk

    Why didn’t you just tip him using the app? Do they not have they capability?

  • To be honest, Dirk, I don’t know if the app can handle tips or not. The ride was a freebie from Intuit, and Spike rang that up on a special card Intuit had provided him. For me to tip him using the app, Spike would have had to get my personal credit or debit card, swipe it, enter the amount, re-connect with the system.
    It was just a lot easier to reach into my pocket and fish out a couple singles. Paper bills are (and I predict will be for some time) still a more convenient choice at times, just like it’s sometimes easier to use the browser made from ground trees and ink — the newspaper.

  • JoeB

    It took much too long to complete that mobile app payment. The lines at Starbucks are long enough. I hate to be behind several people using this method.
    Using a credit card is much faster. In fact it’s usage could be improved if Starbucks would install the card readers found at most places, where the customer slides his card instead of having to give his/her card to the employee to swipe.
    …does anyone know why Starbucks has stopped printing the last four digits of its customers credit card on the receipts. As far as I know Starbucks is the only merchant I’ve dealt with who fails to include those four digits.