Starbucks Soars with Mobile Payment Program

Starbucks said 26 million smartphone transactions were made to buy its coffee and other products in less than a year since it started using a mobile payment app, 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 started 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 scan a barcodes displayed on the user’s smartphone screen. The barcode 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 barcode 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 barcode 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 U.S. stores accept mobile payments, including about 2,000 stores in 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 1000 stores in Canada on November 8 and will appear at 700 U.K. stores January 5.

In November, Starbucks introduced an animated augmented reality app that can be downloaded to some smartphones. Called the Starbucks Cup Magic app, customers in the store 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 the 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 @matthamblen or subscribe to Matt’s RSS feed . His e-mail address is mhamblen@computerworld.com.

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