The core benefit of a mobile payment system like Starbucks is in "transforming the point of sale into a point of engagement," Kingstone wrote in a recent report. Successful vendors use mobile payments as a component of a "broader, dynamic interaction" with the customer.
It is hard to guess what portion of the estimated $1 billion in mobile payments might have been lost to Starbucks if it did not have the loyalty program tied to a smartphone app that can be read by a barcode scanner, analysts said. Starbucks' success is not primarily because of their mobile transactions as much as its customers' loyalty to the product and brand that was improved by the use of mobile payments.
"What's most important to the Starbucks success is the loyalty and rewards for customer retention and their incremental spending," Kingstone said. "It's irrelevant whether its NFC-based, QR-code based or Beacon based. It's about providing value across the customer journey. The future is all about driving down the customer friction from ordering to paying and rewarding for frequent purchases."
Jordan McKee, also an analyst at Yankee Group, said Starbucks was smart to use available technology with barcode scanning to lure customers into a loyalty program as soon as possible.
"Much of Starbucks success is a testament to their brand, but they were able to pull people into this mobile payment system quickly," he said. "It's not necessarily about the barcode scanning, but the app they built that ties in loyalty and offers, which absolutely pulled more people in. The people who tend to use it are already loyal."
McKee said that if and when Starbucks upgrades its barcode scanning capability, it might be to use Bluetooth Smart (previously called Bluetooth 4.0) technology, where smartphones communicate wirelessly with payment terminals. NFC is considered more secure because it is a near-touch technology, but Bluetooth Smart is not only secure, it has added benefits beyond the payment terminal. Those benefits include sending pop-up notices to a customer's smartphone or tablet when the customer passes an area in a store with a Bluetooth transmitter.
"Bluetooth is ubiquitous, more so than NFC, and that's all that anybody in retail seems to be talking about these days for mobile transactions or marketing in stores," McKee said. "There are so many use cases and that's what makes it attractive."
This article, Starbucks hits $1B in mobile payment revenues in 2013, analysis says , was originally published at Computerworld.com.
Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen or subscribe to Matt's RSS feed. His email address is firstname.lastname@example.org.
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