Starbucks' In-Store Mobile Payments Estimated to Be More Popular Than Apple Pay in U.S.

[zepfhyr]

It's also worth pointing out that Starbucks' payment method uses a refillable gift card that doubles as a loyalty card. Using the loyalty card earns bonus rewards. If you use Apple Pay, you don't get those rewards. If Starbucks were to make their loyalty card work like the Walgreens loyalty card, then I bought Apple Pay transactions at Starbucks would increase significantly. But it's not in Starbucks' best interests to do so. As it stands, people pre-pay for their coffee (sometimes by automatically refilling their card to $10 whenever it drops below a certain threshold) and Starbucks gets to utilize those funds immediately, without having to provide the product until a later date.

I would be interested to see numbers on Walgreens loyalty card usage before and after Apple Pay integration. I think those numbers would be a lot more interesting.

 

[wigby]

By the end of 2018, an estimated 23.4 million users in the United States will be paying for their coffees and bakery items at Starbucks using the company's own in-store mobile payment system. The estimate comes from research firm eMarketer (via Recode), which also predicts that Apple Pay will hit 22 million users by the end of the year.

Starbucks itself says that its mobile order-and-pay system accounted for 12 percent of all U.S. transactions in the quarter that ended April 1, and eMarketer predicts the company will hit 29.8 million in-store mobile payment users by 2022. According to the data, Starbucks rises above Apple Pay (predicted at 27.5 million in 2022), Google Pay (14.9 million), and Samsung Pay (13.2 million).

This could be due to the Starbucks app's cross-platform availability on iOS [Direct Link] and Android, whereas Apple Pay is locked to iPhones for mobile payments and Google Pay and Samsung Pay are found on Android. Still, it's an impressive feat for a single-restaurant payment app to gather enough users to compete with mobile wallets that are aiming for more universal, multi-location appeal, if eMarketer's estimates are correct.

eMarketer also points out that Starbucks launched in-store mobile payments before Apple, Google, and Samsung debuted their dedicated mobile wallets, so early adoption could be helping its success. The app also includes a rewards program that earns customers free food and drinks every time they pay using the Starbucks app.

Other points in the report state that Apple Pay is accepted at more than half of U.S. merchants, while Samsung is the most widely accepted at around 80 percent of merchants, while still being the least popular on a user basis. In total, a quarter of U.S. smartphone users over the age of 14, around 55 million owners, will use their devices to make an in-store purchase by the end of 2018.

Image via eMarketer and Recode​

Apple doesn't divulge its Apple Pay usage, leaving researchers and analysts to estimate how many users might be paying for items in store using the NFC system. Earlier this year, Loup Ventures did just that, estimating that 127 million people were using Apple Pay globally at the end of 2017, 38 million of which were in the U.S. -- a much higher estimate in comparison to eMarketer's report.

About one year ago, The Wall Street Journal highlighted Apple's launch troubles with Apple Pay. In an interview around the same time, senior vice president Eddy Cue said that Apple Pay was growing faster than other mobile wallets and believed it could go so far as to replace cash, debit and credit cards as a primary payment system. "Does it matter if we get there in two years, three years [or] five years?" Cue asked. "Ultimately, no."

Article Link: Starbucks' In-Store Mobile Payments Estimated to Be More Popular Than Apple Pay in U.S.

Didn't this same story come out about a year ago except is was about Walmart instead of Starbucks. The fact that Apple Pay is so close to Starbucks pay should be very concerning to Starbucks. What else do they have to do besides push their coffee and own rewards program all day?

 

[Infinite Vortex]

When I went to Australia, once I realized that practically everyone accepted ApplePay, I literally left my wallet in the hotel room safe for the remainder of my trip.

Your ability to pay for things is 100% dependent on *your* device having battery and is in working order… using a CC isn't and is the responsibility of the vendor/merchant. I don't know what type of traveller you are but to walk out the door with only the one form of payment that is dependent multiple systems itself isn't exactly what I would choose to do.

 

[Braderunner]

I can't believe it's so popular. I hate the way it works, having to reload a gift card. I'd much rather just use a debit/credit card on file. Oh well, I guess I'm too old.

 

[Aleco]

This article is pointless, and extremely misleading.

The business offers incentives if you pay with the application (your SB Gift Card), and a whole rewards system. Furthermore, I’m sure at least 50% who use the app probably use Apple Pay to reload their gift cards, since you’re required to re-enter acc password when using saved payment methods.

With that said, I’d wish Starbucks added NFC for their gift cards. Don’t remember if iOS allows third party apps NFC access.

 

[BuddyTronic]

For the life of me I don't know why people would allow a company to hold their personal funds in escrow, making money off the interest. It's puzzling, but hey to each his own I guess.

Yah, also I am puzzled why people like 2 pumps of syrup and 1 pump of other syrup in a cup of hot water. I mean it's a social thing, I see that, but this fascination with fake coffee I don't get. Yes they do make a real coffee also, but I think they have a lot of sugar syrup drinks selling there.

 

[JMO1]

I use Applepay to reload my Starbucks pay. Is this considered?

By the end of 2018, an estimated 23.4 million users in the United States will be paying for their coffees and bakery items at Starbucks using the company's own in-store mobile payment system. The estimate comes from research firm eMarketer (via Recode), which also predicts that Apple Pay will hit 22 million users by the end of the year.

Starbucks itself says that its mobile order-and-pay system accounted for 12 percent of all U.S. transactions in the quarter that ended April 1, and eMarketer predicts the company will hit 29.8 million in-store mobile payment users by 2022. According to the data, Starbucks rises above Apple Pay (predicted at 27.5 million in 2022), Google Pay (14.9 million), and Samsung Pay (13.2 million).

This could be due to the Starbucks app's cross-platform availability on iOS [Direct Link] and Android, whereas Apple Pay is locked to iPhones for mobile payments and Google Pay and Samsung Pay are found on Android. Still, it's an impressive feat for a single-restaurant payment app to gather enough users to compete with mobile wallets that are aiming for more universal, multi-location appeal, if eMarketer's estimates are correct.

eMarketer also points out that Starbucks launched in-store mobile payments before Apple, Google, and Samsung debuted their dedicated mobile wallets, so early adoption could be helping its success. The app also includes a rewards program that earns customers free food and drinks every time they pay using the Starbucks app.

Other points in the report state that Apple Pay is accepted at more than half of U.S. merchants, while Samsung is the most widely accepted at around 80 percent of merchants, while still being the least popular on a user basis. In total, a quarter of U.S. smartphone users over the age of 14, around 55 million owners, will use their devices to make an in-store purchase by the end of 2018.

Image via eMarketer and Recode​

Apple doesn't divulge its Apple Pay usage, leaving researchers and analysts to estimate how many users might be paying for items in store using the NFC system. Earlier this year, Loup Ventures did just that, estimating that 127 million people were using Apple Pay globally at the end of 2017, 38 million of which were in the U.S. -- a much higher estimate in comparison to eMarketer's report.

About one year ago, The Wall Street Journal highlighted Apple's launch troubles with Apple Pay. In an interview around the same time, senior vice president Eddy Cue said that Apple Pay was growing faster than other mobile wallets and believed it could go so far as to replace cash, debit and credit cards as a primary payment system. "Does it matter if we get there in two years, three years [or] five years?" Cue asked. "Ultimately, no."

Article Link: Starbucks' In-Store Mobile Payments Estimated to Be More Popular Than Apple Pay in U.S.

 

[riverfreak]

What I think everyone seems to forget is that using Apple Pay (or Samsung Pay - or whatever equivalent) isn't any simpler than using my credit card. I still have to do something… I still have to pull something out… I still have to validate. So where's the advantage? Apple doesn't offer me points or any rewards program so why would I prioritise it over something that does??

Security. I can't wait for the demise of the physical credit card.

 

[bunnicula]

Personally, the only reason why I use my Starbucks app to pay is for the points.

I refill my Starbucks card on the Starbucks app using Apple Pay.

Same as you... the points. If they got rid of points, I'd ditch their app. They have already had a security breach several years ago where people's credit card info they had sorted was stolen. So, I deleted mine and Apple Pay showed up shortly after, so I was able to just use it to reload.

 

[Westside guy]

What I think everyone seems to forget is that using Apple Pay (or Samsung Pay - or whatever equivalent) isn't any simpler than using my credit card.

Different people will have different perspectives, for sure - however, to me, using Apple Pay on my Apple Watch sure *feels* simpler and faster than when I have to pull out a credit card.

 

[Cosmosent]

Very nice article, & way to go Howard Schultz, the ONLY truly innovative BIG-company CEO !

 

[Geardo_Ranger]

I know Apple Wallet allowed the use of branded loyalty cards to be used so that you could redeem or earn points by scanning the card and then making a payment through Apple Pay. It might have been done better if your loyalty cards could be tied directly into the Apple Pay system and automatically integrate your earned / redeemed points dependent on which point of sales system you scan your payment into.

This would make things so much simpler instead of tying your CC to every single loyalty pay system being generated. its just begging to be hacked and your CC info being gained by some other nefarious user.

 

[turtlebud]

if I'm reading this correctly, this is talking about the number of users, not transactions. I think that's a big difference. Anyone can download the starbucks app and pay once and they are considered a user. I would be a single data point on the starbucks line and a single data point on the apple pay line, however, I use apple pay 10x more than the sbux app. Of course, I only go to sbux once every week or two while I'm using apple pay everywhere they accept it (trader joe's, whole foods, gas station, dick's sporting goods, via mobile app to pay for things, etc.).

 

[TechRemarker]

I hate the starbucks app, but go to starbucks all the time, and since still no full support for Apple Pay I have to use their cruddy app, rather than putting out my apple watch wrist and completing the transaction without having to fumble to open an app. ApplePay I believe the past year was updated to support rewards, so Starbucks could embrace apple pay, rather than just to reload a card which isn't very helpful, but doesn't look like they will, because ApplePay favors consumer privacy and then wouldn't be able to exploit our valuable data as Google does.

Also it notes 50% starbucks market share in us, but feels like 5% since the places Apple customer's typically go don't support it. No support at Starbucks, Target, Gas Stations, Websites using chrome and all the other common places people typically shop. Once it does, there will be mass adoption.

 

[AManInACan]

I can't believe this. I feel like someone is operating on inflated/inaccurate numbers here. I remember there was a story that Wal Mart Pay was beating Apple Pay even though Wal Mart pay was only available at Wal Mart at the time-- Couldn't believe that one either. I believe Apple Pay isn't doing as well as people expect, but I can't believe that Starbucks' system is getting more daily users than a payment system available to almost every other retailer on earth.

I can believe it for now because nearly every Sbux regular is paying with their Sbux card for points and they are counting users not transactions. It's like an addiction. But I disagree with the future part of the graph because I don't see a way that Sbux is going to gain 50% more customers between 2017 and 2022. Apple Pay, on the other hand, will become more widely available and people who haven't tried it will finally get on board.

 

[jw2002]

Unlike Walmart, Starbucks does it right because they support both their own payment method and Apple Pay.

 

[bodonnell202]

Starbucks points are a bit of a scam. Well, that's too strong of a word... but if, over the course of a year, participating in their program causes you to make just one or two additional purchases you wouldn't normally have made (oh, look, this email says tomorrow's a double-star day!) then the program probably is not actually saving you money, it's costing you money.

Uh, not really. I was going to buy coffee anyway and the fact that I get roughly every 12th coffee free I'm pretty sure I'm coming out ahead here.

 

[deannnnn]

I use LevelUp, which is QR code based, to pay for lunch probably 2-3 times a week. I don't think I've used Apple Pay once this year. Using LevelUp gets me points and rewards from the restaurants that support it (quite a few in NYC), just like the Starbucks app, but there's no benefit to convince me to use Apple Pay. It's slower than just using my physical Amex card.

 

[otternonsense]

I'm glad you said "in U.S."

Because in the rest of the world Apple Pay is barely even a thing. Heck. most of EU doesn't even have it yet, 4 years down the line.

 

[dontwalkhand]

It isn't. You pay for a travel ticket with Apple Pay and NOT the credit card. The credit card gets charged by Apple Pay because Apple Pay wants money. There are two separate and distinct translations occurring irrespective of whether there are any interactions to facilitate it.

Sounds like you never used Apple Pay before. Apple Pay isn’t a bank. It isn’t separate from your cards. Your card statements look the exact same as if you used the card.
[doublepost=1527009447][/doublepost]

I use LevelUp, which is QR code based, to pay for lunch probably 2-3 times a week. I don't think I've used Apple Pay once this year. Using LevelUp gets me points and rewards from the restaurants that support it (quite a few in NYC), just like the Starbucks app, but there's no benefit to convince me to use Apple Pay. It's slower than just using my physical Amex card.

Look into Chase Pay, works at all level up merchants and gives you UR points

 

[hofer]

I use ApplePay as often as I can, I find it very convenient, especially with an Apple Watch. It is, however, frustrating that so few retailers have chosen to participate. Just this past weekend I went shopping. I went to the following major retailers in the Houston area. Target, JC Penney, TJ Maxx, Kroger, HEB, Home Depot and Lowes. None of them accepted ApplePay, but several cashiers told me that they would accept Samsung Pay, probably because Samsung use Magnetic Secure Transmission, which work with a standard card reader.
Perhaps this is also the reason that among my friends who all own ApplePay capable iphones, only about one in ten actually have it enabled.

ApplePay has a long way to go for it to be really practical.

 

[dontwalkhand]

You get the credit card points when you use the card through Apple Pay.

As for why to use it, security. Apple Pay works with a one-time transaction ID that it would be totally useless to steal.

It also means you don’t have to carry all your physical cards. I carry one credit card for places that don’t take Apple Pay but leave my other cards at home, including debit card (bank allows transactions with virtual card).

And let me turn the question around - what’s the advantage to pulling out your physical card?

Exactly this, I love Apple Pay for this, I also use the Valley Metro app for the bus/train here (you’re in SF you can use MuniMobile, and VTA EasyFare), I’m installing a Viper Smart Start to eliminate the car keys, and now I literally have to leave the house with a phone and two cards, a CC and an ID. The phone literally handles everything else, I love traveling light. I use Walmart Pay and Level up as well. Now my wallet is just a thin pouch with two cards, love it.

 

[jweinraub]

I don't think reloading a card is considered a transaction. Transactions in this instance are typically qualified as making a purchase.

Though it is a purchase. You are pre-paying a set amount that goes on your starbucks card, so in essence the starbucks card just deducts from that balance.

That being said as others pointed out, they use it for the points. Also with the pre-order, do what I need, and have my coffee ready by the time I arrive. The convenience factor of not standing in line is terrific. Though the use of the app is picking up where I had to wait at the coffee pickup station.

 

[bodonnell202]

For the life of me I don't know why people would allow a company to hold their personal funds in escrow, making money off the interest. It's puzzling, but hey to each his own I guess.

Meh, I generally don't have more than about $10 on there at any given time, and compared to the 0% interest my chequing account pays it doesn't really make a difference at all.

 

[Spartan23]

I love using Apple Pay. It’s incredibly easy to use and so convenient. I wish more places offered them. Yeah, I’m looking at you gas stations, grocery stores, stores within the mall.