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In the largest U.S. chainwide expansion yet seen in mobile payments, Starbucks Coffee Co. announced on Wednesday it is extending its proprietary, prepaid mobile payments pilot to all of its U.S. company-owned stores. The move brings the chain’s Starbucks Card Mobile App to almost 6,800 stores and increases the number of Starbucks locations accepting mobile payments from more than 1,300 to more than 8,100, including more than 1,000 participating locations inside Target Corp. stores. The chain has a total of 11,131 U.S. stores. counting franchised locations.
Available free of charge for Apple iPhone and BlackBerry model smart phones, the Starbucks app lets customers with prepaid Starbucks Card accounts pay for their lattes and other items using 2-D bar codes the app displays on their phones’ screens. Customers pay by holding their phones next to a countertop bar-code scanner. The developer of the app, which also lets customers find nearby stores, check their accounts, and reload them with a credit card or from a PayPal account, is Larkspur, Calif.-based mFoundry Inc.
The Seattle-based coffee chain started the pilot in September 2009 in a handful of West Coast stores, expanded it to the Target locations last April, and then expanded it again, this time to some 300 standalone stores in and around New York City, in October. By going national, the chain says in its announcement that it is now running “the largest mobile-payment program in the U.S.”
While it does not release specific numbers for its prepaid card, Starbucks said on Wednesday the card is held by “several million” customers. These customers loaded more than $1.5 billion on their cards last year, up 21% from 2009, and some 20% of Starbucks transactions are now conducted with the card, the chain says. Meanwhile, it says more than one-third of its customers have smart phones. “Mobile payment will extend the way our customers experience and use their Starbucks card,” said Brady Brewer, a Starbucks vice president, in a statement.
Also on Wednesday, Atlanta-based Acculynk Inc. said it will introduce in March a mobile version of its service that lets consumer make online payments with PIN-secured debit cards. The new service, initially available for Apple Inc.’s iPhone, will feature a version of the company’s virtual, scrambling PIN pad, which will display on smart phone screens to allow consumers to enter debit card PINs. Availability for phones using Google Inc.’s Android, BlackBerry, and Windows 7 operating systems will follow soon after the introduction.
Ashish Bahl, Acculynk’s chief executive, says the company began work on the mobile version of its PaySecure service in August and soon began talks with unnamed money-transfer networks that expressed an interest in a mobile PIN-debit capability. Bahl says the company has arrangements with several of these companies, though he is not yet ready to announce them. “The reason for doing the money-transfer option first is that it’s such a large and burgeoning market,” he notes.
Retail payments could follow, he says. In particular, the Durbin Amendment, by drastically cutting interchange costs on debit cards, has made the cost of processing small-value transactions more attractive, he says. “Durbin just expands our market dramatically,” he says.
Launched in 2009 as a means by which consumers could pay online merchants with PIN-secured debit cards, the PaySecure service has been adopted by nine electronic funds transfer networks. The company says it has been enabled on more than 1,000 merchant Web sites.
These announcements followed a statement on Tuesday by San Diego-based Mitek Systems Inc. that it has signed “at least” 10 financial institutions, including three of the country’s 10 largest retail banks and one of the 30 largest U.S. credit unions, for its mobile remote deposit capture application. The product lets consumers deposit checks by snapping a photo of them with a mobile phone and transmitting the image to the bank. Other than PayPal Inc., which adopted the product last fall, the company did not name any of the clients.
Mitek’s product, which works on the iPhone, BlackBerry models, and Android-powered smart phones, is marketed to financial institutions through processors and technology integrators, including Fiserv Inc., FIS, NCR Corp., Jack Henry and Associates, BankServ, Wausau Financial Systems, J&B Software, RDM, Bluepoint Solutions, and Cachet Financial.
