At its three-day Global Leadership Conference this week, Starbucks announced further details about its planned rollout and support for Square’s mobile payments platform. First revealed in August, the deal will allow iPhone and Android users to pay using the Square mobile app at Starbucks’ 7,000 U.S. locations. Now, we have a more exact timeframe for that launch: early November. (Previously, the company had said “before the holidays.”) But Starbucks has also been busy updating its own native mobile applications, which allow customers to pay with their Starbucks card via an app. And now that app supports Passbook on iOS, too.
While it’s good that a company like Starbucks is embracing mobile payment innovation, in the immediate future, mobile payments are going to get a little messy.
Before smartphones and mobile payments, customers still had to think through the same things they have to think through now when checking out: pay with cash, credit, check, or store card? Now these choices are digitized, but it’s not just a matter of whipping out a mobile wallet app on your phone and tapping on the answer. With Square and Apple’s Passbook, in particular, Starbucks’ customers will soon have two very similar solutions to choose from: both options will support Starbucks cards, both will support Starbucks’ loyalty program, both will support barcode scanning and both will support geo-fenced pop-ups.
To be clear, the Starbucks card and associated loyalty program integration into Square will not be available at launch, nor will geo-fencing and “pay by name.” But these things are on the roadmap.
However, only Square will support paying with bank cards, and only Square will support the “pay with name” feature that lets consumers simply speak their name at checkout.
Starbucks has decided to opt for a faster rollout of Square following its $25 million investment in the company, as opposed to waiting until all the various integrations between its in-house programs and Square’s feature set are complete. For Square customers, that’s a good thing. But for customers who are just now dipping their toe into mobile payments, it’s going to get confusing pretty soon.
Right now, the payment choice is an easier one to make – if you want to pay with your Starbucks card, you use the Starbucks app, but if you want to pay with your bank card, you use Square. However, when the loyalty program becomes integrated into Square, customers will have to decide which app they prefer. Because Apple’s Passbook now supports Starbucks card integration, it’s possible that many users will simply choose that platform. But given Starbucks’ $25 million investment in Square, wouldn’t they rather move their customers over to Square?
Apparently not. Starbucks is prepared to support the dual mobile payments options for some time. The company also said this week that it will enable digital tipping on Square and its existing mobile apps in summer 2013. A Starbucks representative confirmed that there are “no plans” to make the mobile app disappear. “It’s just another great way to pay at Starbucks and Starbucks will continue to grow and innovate its existing mobile payment platform as well as our Square payment platform,” she said. And Apple Passbook won’t work in Square, she added.
Awesome. And this is just the confusion which iOS users will face, due to Apple Passbook. On Android, there are other issues surrounding mobile payment confusion. (Google Wallet, anyone)? It’s good to have choices, but for mobile payments to ever really take root, consumers need consistency. Square, thanks to its cross-platform support, has the potential to offer that consistency. But if a business like Starbucks wants to helpfully support both of its mobile payment early adopter customer bases instead of forcing app users to migrate to Square when the Square integrations are complete, then they’re not actually helping consumers or the mobile payments ecosystem as a whole. With mobile payments, multiple options is OK to a point. But two options that will (eventually) do the exact same thing isn’t helping anyone.