In mid-2013 DC Magnates covered the fast growth taking place at Startbucks for its mobile payment app. According to data from Berg Insight, in 2012 Starbucks mobile app purchases were around $250 million, and accounted for an estimated 50% of all US mobile payments. For 2013, the company appears to have quadrupled their previous year figures. According to recent analysis from Business Insider Intelligence, customer purchases in 2013 using the Starbucks app were in the $1 billion range.
There are a lot of factors at play that are leading to coffee company’s success in the mobile space. Among core items according to Business Insider is that Startbucks has tied its mobile payments together with its loyalty program; thereby offering users discounts and free purchases for using the app. However, in this regard, the loyalty product isn’t new to Starbucks as it has been offering such a service via store cards for over ten years. As such, the app based loyalty offering is simply the evolvement of their existing frequent customer program. In addition, Starbucks is also benefiting from overall uptake in smartphones which is helping driving their mobile transaction volumes higher,
As written about last year, another core factor of Starbucks growth in mobile is the simplicity of the product. Users can connect their credit cards are fill up their mobile apps with cash and know they will virtually be able to buy coffee and other items on nearly every street block in the US. Also, as an established company, there is a lower barrier of trust that Startbucks need to establish to gain new users for their product.
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Future of money is digital
At DC Magnates, we like to say that the ‘future of money is digital’. In the same way that music and videos have moved digital, a similar change is occurring in money and payments. In reality, this has been taking place for many years before the advent of bitcoins; just with centralized networks and government backed currencies (think credit cards and central bank loans to save banks where little to no actual cash is transferred with Excel sheets doing all the work). The emergence of bitcoins and other digital currencies has proved that digitalization of money can work on a decentralized and unbacked manner. It also introduced the world to peer to peer online payments as well as combined multiple existing cryptographic technologies together.
In terms of digital currencies, the example of Starbucks provides proof of perhaps the most important ingredient for a cashless and digital monetary future; customer adoption. While many emerging technologies make sense on a practical and economic level, the reality is that if consumers don’t feel comfortable with current innovations; adoption levels for new products may remain low. However, when it comes to mobile payments, by providing a simple and trusted product, Startbucks is breaking down the barriers that will lead to faster adoption for the entire sector. For digital currencies, the existing foundation being created by Starbucks and other established brands, provides fertile potential to leverage with even greater innovation, more wide reaching mobile payment options that just coffee, and cross-border commerce.