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3 Reasons Why Starbucks’ Mobile Payment Will Prevail

08/16/2012

Retailers appear to be jumping on the smartphone payment bandwagon faster that you can say near field communications.

Just last week Starbucks announced its acquisition of Square, the mobile payment technology firm. Now a group of big retailers, including 7-Eleven, Best Buy, CVS and Wal-Mart, said on Wednesday that they were forming a company that would offer a way for customers to pay for purchases with their smartphones.

Other than announcing the formation of the payment network, to be called Merchant Customer Exchange, the companies gave few details about how their mobile system would work or when it would be released. They said that their payment application would be available for virtually any smartphone, and that it would use a secure technology to process transactions.

The challenge these retailers face  is by creating unique mobile payment systems they may be also creating uncertainty among consumers as to which mobile payment system works what stores. The beauty of cash or credit/debit cards is that, with a few exceptions, consumers know they’ll be able to make their purchases using cash or card.

If Walmart and CVS have a mobile payment system that differs from that at Starbucks and Target…well, that’s not so hot. Filling your smartphones memory with several mobile payment apps doesn’t feel like a big evolution.

That said, mobile payment is convenient and undoubtedly on the rise. My money is on the Starbucks/Square combo for three reasons. Starbucks currently processes over one million mobile payments a week with its proprietary payment app. On top of that Starbucks has proven to be skilled marketers. Finally Starbucks is making moves into the grocery aisles which gives them an opportunity to sell their mobile payment system to grocers. Most American’s make multiple stops at the grocery store every week. As a result mobile payment becomes quickly integrated into everyday transactions like coffee and groceries.

Research shows that 91 percent of Americans keep their mobile devices at their side 24 hours a day. If your mobile device replaces your wallet, remember to keep your phone charged. I can’t recall a credit card with a low battery.

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