Starbucks has become that much more convenient. Today, the NYT showed us that we can use our phone to buy coffee. No more carrying your wallet, and your phone. At over 7000 Starbucks locations, we can start to do micropayments with our phone app.
Anything that gives us easier, faster access to coffee deserves a big WhooHooo. But there’s more to this story.
Interestingly, the mobile payment market is already proven and working. Back in 2005-6, I worked on a project with HP that focused on enabling payments through Japan’s mobile platform. Why Japan you might ask? Because NTT docomo is the dominant provider. Instead of having to talk to multiple mobile operators, there was 1 pilot to run. And it meant ubiquity for the user. Which meant that the consumer didn’t have to worry about whether this app would work here, or this chip reader would work there. By centralizing at the mobile operator level, the variability of the handset device, and the merchant entity were not obstacles to adoption. And so, it’s been incredibly well received. The fact that over 10 million users subscribe to it in Japan is a testament to the user value proposition.
This will perpetuate. You have to have a Starbucks specific application, and so you can imagine having then an application for Safeway, another for Togo’s, another for Border’s and so on. The reasons for any vendor to do this are high: mostly it is that transactions average 10 seconds. 10 second as compared to the average of 57 seconds with a credit card. No retailer can afford to not do this. Plus, it forms more “stickiness” in marketing lingo to return to Starbucks vs. try out Peets.
Just last month, Google started a pilot in Portland
, Oregon called Hotpot to test out an NFC version (NFC is the technical term standing for near field communications…think WiFi equivalent) that will let users get coupons or other rewards for using it. Creating an incentive to drive adoption is interesting and it fits nicely with the But many in the industry speculate that NFC
is too cumbersome.
The digital wallet or mobile payment market is likely one of the biggest B2B market opportunities for the financial industry and telcos. Paypal should have owned this market years ago. It of course could be the next B2B play in advertising and Google is lined up to be successful. In the meantime, we will likely see every brand like Starbucks go at it on their own. Let’s see which model gets traction over time in the US.
What are your thoughts around digital wallets?