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Why Starbucks' Mobile Payment Success Is Good News for You

Starbucks is dominating the mobile payment market--which could bode well for smaller, independent businesses.
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According to a new report by Berg Insights, one company in particular is dominating the mobile payment market: Starbucks.

The multi-national coffee chain's payment app accounted for the "vast majority" of all mobile purchases--some $500 million total--in 2012, say Berg analysts. 

This isn't just good news for Starbucks; this is great news for a whole host of companies.

Berg contends that as customers buy more espresso and pastries using their mobile wallets, they will also want to use the technology for other purchases. Which could mean mainstream adoption for a bevy of mobile payment companies--think Square (which has a partnership with Starbucks), Dwolla, LevelUp, and TabbedOut--not to mention independent retailers looking to gain footing against slower, less tech-savvy incumbents in their industry.

To date, mobile payment platforms have elicited a somewhat mixed reaction in terms of real-life application. Inc.'s sister publication, Fast Company, detailed the sometimes-painful process of paying for Starbucks lattes via Square in March.

But the numbers don't lie. And the apparent profitability of Starbucks' mobile payment strategy--which uses a mix of Square technology and an in-house payment app for processing giftcards--may pave the way for other retailers still on the fence about adopting the technology.

Starbucks, for its part, is betting on Square's success. In addition to a partnership announced last August, the coffee chain has invested $25 million in the start-up, and Starbucks CEO Howard Schultz currently serves on its board of directors.

Last updated: Jun 4, 2013

FRANCESCA FENZI | Staff Writer

Francesca Fenzi reports on entrepreneurship, technology and small business news from San Francisco. Her work has previously appeared in TIME, USA Today, Pop City and The Northside Chronicle.




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