Payments
What mobile payment providers can learn from Starbucks
- Customers more frequently use Starbucks in-app payments than mobile wallets like Apple Pay, Google Pay or Samsung Pay
- Mobile payment providers could learn from Starbucks' experience of building loyalty and incentives into the digital payment experience

The road to ubiquity in mobile payments is a customer experience that goes much farther than the transaction itself.
It's no surprise that customers' frequency of use of the QR code-based payment capability within the Starbucks app beats Apple Pay, Samsung Pay, and Google Pay. Seven years after rolling out in-app payments, Starbucks has achieved what mobile payment providers have long struggled with -- getting customers to change their behavior by swapping plastic cards with mobile payments. By the end of last year, mobile payments accounted for 30 percent of all payment transactions, the result of the success of reward point incentives, targeted in-app offers and the company's immense customer base for whom mobile payments make the relationship stronger. Around 100 million customers enter Starbucks stores every week, according to the company.
According to a recent eMarketer survey, this year 23.4 million people aged 14 or over will use the Starbucks app to make a point-of-sale purchase at least once every 6 months -- compared to 22 million who who use Apple Pay, 11 million who will use Google Pay, and around 10 million who will use Samsung Pay.
Here are four lessons from the Starbucks app that could help drive mobile payment adoption.
Adding loyalty incentives to customers who pay with the app
Starbucks customers know that every app-enabled purchase will result in loyalty rewards, and redeeming them is easy and consistent; customers know where and how points can be applied to future purchases.
"It’s not a payment app, it’s a loyalty app with payment enablement," said Aite senior analyst Thad Peterson. "Other mobile wallets face much larger challenges; they need ubiquitous acceptance which isn’t quite there in the U.S. and widespread adoption."
Fusing mobile payments with established customer habits
An advantage a large retailer like Starbucks has is brand affinity -- a factor banks and card issuers struggle with when customers use mobile wallets.
"The [Starbucks] brand scores strongly in two particular archetypes, or markers: indulgence: centered on moments of pampering and gratification, and ritual, when the brand is ingrained into daily life," said Rina Plapler, a partner at branding consultancy MBLM. "The more you use the app, the more it rewards you and recognizes you."
In-app payments enhance the daily habit of buying coffee and other items for Starbucks customers by making the payment experience faster and more efficient.
"Coffee is a somewhat unique category -- it’s a high frequency, low value purchase, and there is very little risk to the customer if the transaction doesn’t work out right," Peterson said.
Consistency of experience
The advantage Starbucks has over mobile payment providers is owning the infrastructure and ensuring a consistent in-app payment experience at nearly all stores.
"The Starbucks app can only be used at one place; Starbucks users go to Starbucks many times a week, and you know whenever you go there, you're going to use the app and get rewards -- that doesn't hold true for any of the other 'pays,'" said PayGility Advisors partner David True.
A strategy mobile payment providers could use is partner with large retailers' points programs and integrate them within mobile wallet experiences.
"What I would do is find quick-service restaurants where people go regularly -- [payment providers] should think about a Starbucks situation as the idea for changing behavior," True said.
Using customer data for personalized experiences at checkout
The retailer, based on a customer's location data, can push targeted offers to customers using the app.
"People don’t want choices anymore,” Roger Park, the innovation and strategy lead for EY’s financial services organization, recently told Tearsheet. “They want you to know them well enough to know exactly what you want and when you want it and if you can do that in a reliable, trustworthy way they will give you access to their data and their lives."
Some financial brands are using location-based data and analytics tools to allow for a Starbucks app-type experience for customers using their cards within mobile wallets at selected retailers. Capital One, for example, is using data and analytics platform Foursquare to push location-based offers to customers.
The Starbucks app offers a bundle of services that gives the customer the idea they're getting additional value -- a personalized customer experience that goes beyond the payment transaction. Through loyalty points, convenience and personalized offers, the app deepens the relationship with customers.
"They're creating positive relationships [with the brand] that's driving someone to use the app for mobile payments, and there's stickiness with the other functionalities like loyalty," said Capco partner Bryce VanDiver. "These are going to be increasingly important as we move towards cashless stores."
As more retailers' point-of-sale systems accept mobile payments, more consumers will use them, but in the meantime, retail giants like Starbucks may have other plans to grow financial services and payments capabilities within their mobile apps.
"I think blockchain technology is probably the rails in which an integrated app at Starbucks will be sitting on top of,” Starbucks executive chairman Howard Schultz said in an interview earlier this year.
