August 9, 2012 |
The Starbucks/Square partnership certainly is among the major recent announcements related to in-store mobile payments, and has the potential to significantly help jump start adoption. While I don’t agree with some of the more euphoric comments that this one move is the singular event that ushers in mobile payments, it is a big deal.
Key questions that our research addresses still remain:
1) “What’s the benefit to consumers” (short answer: it’s still more of a novelty. If a consumer could start ordering earlier in the long early morning queues or loyalty benefits such as discounts or coupons are integrated the mainstream consumer will be standoffish. For more details, see our data on consumers who are early adopters of mobile payments, banking, alerts and more, along with analysis of the solutions offered by various providers.
2) “Is it safe?” as discussed in Mary Monahan’s recent QR codes report the Starbucks solution remains open on the consumers’ phone, and that’s risky. With additional Javelin research from our 2012 ID Fraud survey report finding that only 38% of consumers use a password on their phone’s home screen, there’s more than a six-in-ten chance that the person who finds a lost Starbucks users’ phone is able to simply pick it up, walk to the nearest Starbucks, and buy as many beans and lattes as the balance on the payment account has in store for them.
3) “Does this mean that Starbucks is going into the payment business?” Don’t completely rule anything in payments out, although it’s unlikely. Leading merchants such as Amazon and WalMart innovate in new payments primarily to drive their traditional business, just as Google launches new payments offerings to drive it’s ad revenue. Merchants who lead in any one category often innovate in new payments for this reason.
For great perspective on payments adoption trends, see Beth Robertson’s 2012 retail payments forecast report. This is the context that completely brings individual news releases into perspective.