Starbucks Mobile Payments Draw 3 Million Customers

If there’s anything to which Starbucks customers are more addicted than caffeine, it’s Starbucks’ new mobile payment system.

Only two short months ago, Starbucks rolled out a branded mobile payments system through the Starbucks Card Mobile iPhone and BlackBerry applications, which can be used at nearly 7,000 Starbucks across the US.

Now, the results are in.

This week, Starbucks announced that some 3 million coffee-crazy customers have purchased their morning joe using Starbucks Card Mobile.

The announcement was made by chairman and CEO Howard Schultz during the Starbucks annual meeting of shareholders in Seattle.

“Starbucks now offers the nation’s largest mobile payment network,” added Brady Brewer, vice president of Starbucks.

Schultz, however, maintains that both mobile payments and social networking will remain vital aspects of the company’s “blueprint for growth” in the future.

At present, Starbucks boasts 29 million Facebook fans and an equally massive support base on Twitter and Foursquare.

Google forging ahead with mPayment system

Why this matters: The planned payment system would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores.

Google Inc. is teaming up with MasterCard Inc. and Citigroup Inc. to embed technology in Android mobile devices that would allow consumers to make purchases by waving their smartphones in front of a small reader at the checkout counter, according to people familiar with the matter.

The Internet giant is aiming to make mobile payments easier in a bid to boost its advertising business. The planned payment system would allow Google to offer retailers more data about their customers and help them target ads and discount offers to mobile-device users near their stores, these people said. Google isn’t expected to get a cut of the transaction fees.

The project, which is in its early stages, would allow holders of Citigroup-issued debit and credit cards to pay for purchases by activating a mobile-payment application developed for one current model and many coming models of Android phones. The idea is to turn the phones into a kind of electronic wallet.

These phone users also would be able to get targeted ads or discount offers, which Google hopes to sell to local merchants. They also could manage credit-card accounts and track spending through an application on their smartphone, the people said.

The venture also involves VeriFone Systems Inc., which makes credit-card readers for cash registers. VeriFone would roll out more so-called contact-less devices, or readers that enable consumers to pay with a wave or tap of a credit or debit card. The readers also would allow people to pay by tapping their smartphones, said the people familiar with the matter.

The credit-card readers involved all use “near field communication” technology that is already in place at thousands of merchants nationwide. Today, customers who have credit cards embedded with that technology have the option of waving a card in front of a reader, instead of using a traditional swipe method.

Google’s Android mobile-device software, which powers hundreds of different devices, supports this technology.

The planned payment system would be unlikely to put consumers at any greater financial risks. As with conventional credit-card transactions, the card companies would cover the cost of unauthorized purchases. Nor is the NFC technology itself particularly vulnerable.

“Because it’s contact-less there’s a perception people can grab it from thin air, but it’s actually a more sophisticated technology than credit cards with a magnetic stripe, making it more difficult to steal a consumer’s payment information,” said Nick Holland, a mobile-transactions analyst at Yankee Group.

The Google-backed system, which is expected to be released this year, marks the latest effort to broaden the uses of smartphones for everyday activities—from chatting to emailing to shopping. The telecom, technology and financial-services industries all are looking for strategies to make them leaders in the evolving business of getting consumers to pay for products with their phones. Offering that option could allow device makers such as Apple Inc. to sell more of their phones.

Wireless carriers Verizon Wireless—a venture of Vodafone Group PLC and Verizon Communications Inc.—AT&T Inc. and T-Mobile USA said last fall that they would team up on a venture, dubbed Isis, to enable customers to pay for goods with their smartphones. Discover Financial Services Inc. will process those payments, potentially eliminating the need to carry cash, credit and debit cards, reward cards and transit passes.

Google’s move is part of its quest to sell ads and other services to local retailers, a growth frontier for Internet companies. Google executives, including outgoing Chief Executive Eric Schmidt, haven’t been shy about saying that Android devices could serve as payment facilitators, thanks to NFC technology, though they haven’t specified what Google’s role will be.

“A phone is a lot smarter than a card,” said Doug Bergeron, VeriFone’s chief executive, in an interview. “It opens the door to a rich experience at the point of sale that retailers really covet.”

He declined to comment on his company’s relationship with Google.

Mr. Bergeron added that he also expects Apple to embed NFC technology in future iPhones. BlackBerry maker Research in Motion Ltd. has said its future phones would support NFC.

A spokeswoman for Apple declined to comment.

The market for mobile payments is expected to grow significantly in the next several years, reaching $618 billion by 2016, according to a report by consulting firm Edgar, Dunn & Co. and sponsored by MasterCard.

A report issued this month by the Federal Reserve cited industry estimates that there were 70 million contact-less devices, including credit and debit cards, and 150,000 contact-less readers installed by merchants in the U.S.

While most of the financial activity that now takes place on smartphones involves people engaging in transactions with their bank, the credit-card industry has spent millions of dollars to issue new plastic with the contact-less chip that speeds the check-out process.

The technology has been slow to catch on, however, partly because many consumers remain unaware of it, and they still need to pull out their card to use it.

MasterCard and rival Visa Inc. have been courting customers with contact-less programs and mobile-payment pilot tests. Visa and several large banks are testing mobile-payment programs that allow consumers to make contact-less payments with an existing smartphone equipped with a special chip card and antenna.

If Google’s program with MasterCard and Citigroup is successful, it could potentially expand to other card issuers and networks. In addition to attracting new consumers through ads or offers and seeing instant results, the program would offer retailers access to data about customers so they would be able to market future offers to their devices, said people familiar with the matter.

That potential, however, could raise privacy concerns.

Unlike some other forms of local advertising, the system would allow Google to prove whether ads targeted at certain groups of people led directly to in-store sales, these people said.

Google, by helping to facilitate transactions and redemptions of coupons and discounts, may also be able to gain insight into consumer-spending behavior, said a person familiar with the matter.

A representative of Wal-Mart Stores Inc. confirmed the company had a briefing with Google about the technology, but characterized it as very preliminary discussions and said it hasn’t been asked to adopt it.

The local business ad market is a massive opportunity that has begun to be exploited by Internet companies such as Groupon Inc., social network Facebook Inc., and business-reviews site Yelp Inc.

Separate from ad spending by large retailers, small and medium-sized businesses with 100 or fewer employees collectively spent $35 billion to $40 billion in local advertising in the U.S. in 2009, estimates BIA/Kelsey, a local-media advisory firm.

Oracle survey reveals people of different ages experience mobile differently

from Connected Planet Mar 22, 2011 1:51 PM,

The 35-to-54 age group shows the fastest rate of growth in terms of researching and transacting online

Oracle today released key findings from its report, “Mobile Trends: Consumer Views of Mobile Shopping and Mobile Service Providers.”

After talking to more than 1,000 mobile phone consumers in the United States, Oracle released information about how people today use mobile devices for shopping and commerce-related activities, as well as what they hope to do with mobile devices in the future.

In the study, it became apparent that consumers increasingly rely on their mobile devices to do comparisons and research before purchasing products or services. About 48% of consumers conceded they use their mobile devices to look up product ratings or to find promotions. One of the more surprising findings in the survey was that the 35-to-54 year old segment is the age group with the fastest rate of growth in terms of researching and transacting online. While the 18-to-34 segment still dominates for actual use, the usage in the 35-to-54 bracket nearly tripled.

For those older than 35, it was twice as likely they’d leverage a mobile device to research products and services than their younger brethren (growing from 19% to 36% for users aged 55 and older and 23% to 44% for those aged 35-54 from the previous year’s research). Of the younger respondents in the18-34 bracket, 60% said they use their mobile device to research products and services (up from 41 percent the previous year).

In addition, more than two times as many consumers aged 35 and older have made a purchase via a mobile phone since 2009, compared to a 74% increase for consumers aged 18-34.

“We found that the perception of the experience also varied in these two groups, as the younger demographic wants more self-service on the Web and more online access to information about their plans and accounts, while the older bracket prefers to learn about plans, devices and accounts directly from a customer service representative. While the younger people feel comfortable connecting via chat or click-to-call, the older people prefer to be able to talk to someone on the phone immediately,” said Kelly O’Neill,
product strategy director for Oracle-ATG.

What is also remarkable is that most carriers, according to O’Neill, fail to tailor their sites to accommodate those disparate preferences. “The younger generation is more likely to churn, so to fail to personalize or make things relevant to their desires means there is a higher chance of losing them to other competitors,” added O’Neill. She believes telecom providers have to continue to evolve to think more like retailers, which consumers increasingly want them to do. “Rather than compete with products and services alone, carriers have to embrace the idea that customers want their telecom providers to give them the same type of attention and personal experience they get in other industries,” said O’Neill.

That is particularly true as mobile technology continues to invite new business models for merchants and retailers seeking to partner with communications companies. “You cannot overstate the importance of streamlining mobile and retail services to enhance sales and the customer experience,” said Kelley, noting that the survey showed that mobile devices are enhancing the in-store shopping experience, with 28% percent of respondents admitting to using their mobile device for comparing products with competing brands, as well as visiting Web sites to acquire more product information, research product reviews and coupons.

Google To Test Mobile Payments At Stores

Bloomberg , Tuesday, March 15, 2011, 12:06 PM

Breaking into the business of real-world commerce, Google reportedly plans to start testing a mobile-payment service at stores in New York and San Francisco. Within four months, Android users will be able to use their smart phones to buy products and services from select merchants, sources tell Bloomberg. “The project would put Google in a growing field of companies experimenting with [near-field-communication technology], which lets consumers pay for products and services by tapping a device against a register at checkout, giving them an alternative to cash or physical credit cards.”

Regarding New York and San Fran, Engadget writes: “Those two technophile cities represent the most receptive audience NFC is likely to get in the U.S.” Strengthening Google’s already deep consumer ties, the service may combine a user’s financial account information, gift-card balances, store loyalty cards and coupon subscriptions on a single NFC chip on their Android phone. “This is good news for Google, considering the iPhone 5 reportedly won’t have near field communications technology,” notes Business Insider.

“Google, however, doesn’t have many NFC devices out in the world,” according to Fortune. Yet, “If Apple does skip NFC hardware for another year, it will likely give Google a solid window with which to build infrastructure … Apple may in fact choose to skip NFC, instead relying on third parties.” To facilitate the system, Google is reportedly paying for the installation of thousands of special cash-register systems from VeriFone Systems. The registers would accept payments from NFC-equipped phones.

62% of consumers with web-connected mobile devices are buying goods via mobile

Mobile commerce may be maturing at a quicker rate than many experts have predicted, according to a report today from Adobe Scene7. 62% of consumers with web-connected mobile devices have purchased merchandise in a wide range of product categories using their mobile devices, the survey of 1,200 U.S. adult consumers who own these devices finds. Adobe notes in its report that the respondents’ mobile commerce adoption rate is significantly higher than current estimates for the overall population because respondents to this survey all own devices such as smartphones that connect to the web.

While more consumers are becoming comfortable shopping via mobile device, the Adobe Scene7 report finds they still don’t spend close to the amount they do via PC. The greatest segment of mobile shoppers, 45%, spent $249 or less via mobile during the last 12 months, the report says. By comparison, the average annual online spend per shopper in 2010 was $1,139, according to an estimate from research firm eMarketer.

Still, 62% is a strong sign for the future of mobile commerce, even among a group skewed toward smartphone owners. Mobile revenues are poised for big growth, many experts predict. U.S. mobile commerce sales are expected to hit $5.3 billion in 2011, up 83% from a year ago, according to Barclays Capital.

Users of iPhones, men and adults age 30-49 purchase more frequently, buy goods in more categories and generally spend more time shopping than their peers, the report also finds. Users of iPhones overall also spend more—66% report spending $250 or more on mobile purchases in the last 12 months. BlackBerry users rank second with 58% spending $250 or more.

Movies, music and games, according to Adobe, are the most popular buys, purchased by 43% of mobile shoppers. That was trailed by clothing, shoes and jewelry at 30%; electronics at 28%; and books, magazines and newspapers at 26%.

“Shoppers are reaching for their mobile devices to research products and prices at the point of decision,” the report, “Mobile Shopper Insights for 2011,” notes. “Curious consumers are scanning QR codes on outdoor advertising and in magazine pages to get more information about a brand or product. As the impulse strikes them, many shoppers are simply moved to purchase directly from their devices.”

The report finds most mobile shoppers are content with their experience. 80% rate their mobile shopping experience above average. And shoppers are about equally happy with m-commerce sites versus mobile apps. However, for some shopping activities such as researching products and comparing prices, a majority of respondents favor using mobile sites over apps. Two-thirds of the respondents say they prefer sites to apps for accessing product and other shopping content.

So what mobile shopping features do consumers most appreciate? Easy checkout , named by 57% of shoppers, is deemed a top feature, followed by product and pricing information at 53%. Visual information, such as full-screen product view, ranks third with 42%, followed closely by simple keyword search at 40%.

For visual tools, 54% say 360-degree spin is the aid that has potential to prompt them to buy. Side-by-side product comparisons (49%) and interactive zoom and pan (44%) follow. Respondents rank these features ahead of simple keyword search and customer ratings and reviews.

Full-screen image zoom with “next/previous” touchscreen buttons to navigate forward and backward ties with full-screen horizontal scrolling with dragging or flicking images left and right as the top preferred ways to scan pages or screens. Both of these viewing experiences were selected by nearly half of the respondents.

Women are more discriminating than men when it comes to mobile shopping. For example, easy checkout was rated important by 61% of women compared with 51% of men, and 44% of women say search is important compared with 36% of men. Women also place more importance on advanced visual features than men. They, more so than men, deem color-swatching and alternative images—such as an image of a sweater on a model or of a coffee table in a room—as significant. Women also appreciate a good deal more than their male counterparts. 42% of women compared with 35% of men say online promotions and coupons are important factors in their mobile shopping experience.

Men, however, like their mobile video. The presence of mobile video is one area that was rated by more men than women (38% versus 28%) to increase the likelihood to buy.

Top 10 Mobile Trends of 2010: Highlights from comScore’s Mobile Year in Review

Below is a summary of what we see as the top ten overarching mobile trends of 2010:

  1. Phones Keep Getting ‘Smarter’: Smartphone adoption continues to increase across the U.S. and Europe, with most markets surpassing 25-30% market penetration for smartphones. The proliferation of new devices hitting the market in 2010 – including the iPhone 4, Blackberry Storm 2, and Motorola Droid X – has given consumers strong smartphone options across wireless carriers that is helping this segment of the market gain traction.
  2. iPhone Dominates Device Sales: The top two devices sold in 2010 in both the U.S. and EU5 were the iPhone 3GS and iPhone4, respectively. The #3 device in the U.S. was the Blackberry Curve, while the #3 device in the EU5 was the Nokia 5800 – XpressMusic.
  3. Android Storms Smartphone Market: 2010 saw Google’s Android platform grab hold in the mobile marketplace in a big way. In the U.S. alone, Android’s share of the smartphone market jumped from 5% to 29% in just one year, and it leapfrogged Apple to become the #2 smartphone platform after RIM. The number of different smartphones running Android certainly helped accelerate this trend, as did the desire for many consumers on Verizon to opt for a smartphone with a strong app economy.
  4. The App Ecosystem Blossoms: iPhone paved the way for the app ecosystem to emerge as developers create new and interesting apps for consumers every day. While most early apps were developed primarily for the iPhone, we are now seeing vibrant app ecosystems for Android, Blackberry and others.
  5. Email Shifts to the Mobile Phone: 2010 saw usage of PC-based email decline, particularly among teenagers, and it appears that much of that email activity is moving to people’s mobile devices. While Blackberry was once in a league of its own in terms of email functionality, many other devices have since caught up, and consumers are responding. Email now exists across media and mobile devices will continue to be a growing part of that trend.
  6. Location is Everything: Location-based check-in services like Foursquare, Gowalla and Facebook Places all entered the digital lexicon in 2010 and have begun to gain consumer adoption. Other GPS-enabled apps like Google Maps and Garmin have also proved to be among the most popular and widely downloaded.
  7. Social Owns Mobile: Social media is one of the most prevalent and fastest-growing activities on the mobile phone. In the U.S. the number of mobile social media users grew 56% to lead all content categories, and in the UK Facebook accounts for 40% of all time spent on mobile sites.
  8. Mobile Commerce Readies for Lift-off: Mobile commerce, or m-commerce, has yet to gain traction in a significant way, but as smartphone adoption accelerates, technology has begun to facilitate mobile transactions. The next phase in m-commerce will be the emergence of the “mobile wallet” with direct payments coming from the mobile device, with Starbucks leading the way among merchants in installing the technology for such payments.
  9. iPad Redefines the Mobile Landscape: Apple’s blockbuster launch of the iPad in early 2010 set the stage for a completely new category of device to emerge, as several other tablets and e-readers hit the market by the end of the year. As a reasonably sophisticated computing device that is also mobile, the iPad has given new definition to the types of behaviors in which consumers will engage in the mobile environment. The iPad is also causing time-shifting in how and when consumers engage with content, with the iPad showing a high percentage of activity late at night as people wind down for the evening.
  10. Mobile Advertising Market Takes Shape: As mobile media consumption increases, it was only a matter of time before the mobile advertising boom began to take shape. Apple got into the act with the introduction of the iAd, which has already attracted many of the top brand advertisers like AT&T, Citi and Disney. Expect to see more and better quality ad units alongside mobile media content in 2011.

You can see from this selection of highlights that 2010 was another outstanding year, and this year promises to shine even brighter. If you haven’t already downloaded the 2010 Mobile Year in Review, you can do so here. We hope you enjoy and that it gives you a few things to think about on your way to success in 2011…

Our look back at 2010 in digital retailing

Seven intriguing facts from our look back at 2010 in digital retailing:

  1. Facebook surpassed each of the top three web properties Google, Yahoo!, Microsoft based on time spent. Facebook now accounts for 12.3% of all time being spent online, up from 7.2% in 2009.
  2. Communication among younger audiences is shifting from web-based email to instant messaging, social networking and mobile. In fact, the 12-17 year old age group is spending 59% LESS TIME on web-based email.
  3. Flash sale sites (,,,, and gained traction in 2010. Gilt Groupe closed in on one million visitors at the end of 2010, up 52% from one year ago.
  4. Group-buying sites increased in popularity in 2010. Groupon saw visitation grow 712% to 10.7 million visitors. LivingSocial was up 438% to 5.7 million visitors.
  5. Social networking drove growth in display ad impressions. Facebook alone served more than 1 trillion display ads in 2010.
  6. There are significant demographic differences between people who visit retail sites on a PC versus their mobile phones. Mobile retail users are male and younger, in the 18-34 year old segment.
  7. Retail e-commerce was up 10% in 2010 over 2009 reaching $142 billion. Consumer electronics, computer hardware, and books & magazines were the fastest growing e-commerce categories in 2010.

Mobile commerce is a top 2011 priority for direct-to-consumer companies

Mobile commerce is the top new area of investment, the survey finds. 35% of companies say they have a mobile program in place, while 30% are in the early stages of implementation and 25% are investigating options and plan to have a live mobile program in 2011. Less than 5% reported no mobile initiatives planned in the next 12 months.

Mobile commerce is the top new area of investment, the survey finds. 35% of companies say they have a mobile program in place, while 30% are in the early stages of implementation and 25% are investigating options and plan to have a live mobile program in 2011. Less than 5% reported no mobile initiatives planned in the next 12 months.

Half of business-to-consumer companies struggle to understand when to integrate into their e-commerce platform additional systems for functions such as customer reviews or site search, the survey says. 45% say integrating technologies is difficult for technical teams managing a growing backlog of initiatives.

And improving and leveraging product content is a top 2011 priority identified in the survey. 44% of respondents say building out complete product content, including images, data, video, user guides and more, and using it across all channels is a priority this year.