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Starbucks mobile payments perk past 26M transactions

Mobile payments also expanding to Canada and U.K.

December 7, 2011 02:52 PM ET

Computerworld - Starbucks said 26 million smartphone transactions were made to buy its coffee and other products since it started using a mobile payment app less than a year ago, making it the nation's largest mobile payment program.

"The customer response to our mobile apps has been phenomenal," said Adam Brotman, general manager of Starbucks Digital Ventures, in a statement Tuesday. The mobile payment program was recently introduced to Starbucks stores in Canada and will be launched in the U.K. in January.

Starbucks launched its bar-code-based mobile payment app for iPhone and BlackBerry smartphones in the U.S. in January, then added Android smartphones in June.

A digital reader in a Starbucks store scans a bar code displayed on the user's smartphone screen. The bar code is linked to a phone app that is backed by the user's Starbucks Card. Users load the card with dollars from a credit card or other account.

The preference for bar-code scanning isn't necessarily a rejection of near-field communication technology that's being introduced on some smartphones in the U.S. A Starbucks executive said in June that NFC chips aren't widespread enough and could take up to three years to become so, making the bar-code scanning Starbucks' preference for now.

Starbucks said it saw 3 million mobile transactions in the first nine weeks of the program starting in January, which doubled to 6 million transactions for the nine weeks starting in October.

Starbucks didn't divulge the total number of purchases with mobile devices, but said $110 million had been reloaded onto Starbucks Cards directly through the mobile app since January. Globally, $2.4 billion was loaded onto Starbucks Cards in fiscal 2011, with the cards making up one in four transactions in U.S. Starbucks stores. Starbucks Cards were launched a decade ago and $10 billion has been loaded onto them, the company said.

All told, about 9,000 of Starbucks' U.S. stores accept mobile payments, including about 2,000 stores within Target and Safeway stores, and 7,000 company-operated stores. The top U.S. cities for use of the mobile app are New York, Seattle, San Francisco, Chicago and San Jose.

Starbucks mobile payments were introduced to 1,000 stores in Canada on Nov. 8 and will appear in 700 U.K. stores Jan. 5.

In November, Starbucks introduced an animated augmented reality app that can be downloaded to some smartphones. With the Starbucks Cup Magic app, as it's called, customers in the store can scan special signs, cups and coffee bags on sale to see animated characters in holiday scenes. The app is also linked to an eGift function so that users can send eGifts to friends and family from their smartphone.

Starbucks said the Cup Magic app has proved popular, with more than 450,000 users of the augmented reality experience since the Nov. 15 launch.

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at Twitter @matthamblen or subscribe to Hamblen RSSMatt's RSS feed. His e-mail address is mhamblen@computerworld.com.

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