Jonathan Jensen recently highlighted the theme of friction in payments and the importance of focusing on the customer experience. I couldn’t agree more with his sentiments. I began to consider my own experience with mobile payments. Over the past few years, I’ve tried plenty of mobile wallets, payment apps and peer-to-peer (P2P) payment solutions. I’ve even gotten excited about a few. But, alas, the only mobile payment app I use consistently is the Starbucks app for my daily brew. And, I would argue I’m not alone here.
Starbucks is an industry leader in both usage and user satisfaction of their mobile payment app. As a first mover in the space in 2009, usage of the app has grown considerably. Starbucks reports four million transactions are processed per week via the app, representing 11% of sales. Other companies have asked them to ‘white label’ their solution. While the mobile app has gone through iterations, it remains rooted in its customer loyalty program, which is a tiered program but pretty straightforward. For every 10-20 drinks you purchase, you’ll get that next beverage free. That certainly makes you feel better about your £4 latte, now doesn’t it?
For those unfamiliar, the app allows a customer to sync their credit card, PayPal account, or their Starbucks loyalty card to their mobile account for payment. A user is required to load funds from any of these options onto the app. This is arguably one point of friction, but one that the app manages pretty well. And, while other mobile payment companies debate the merits of NFC, Bluetooth, and other technical solutions for transferring data, Starbucks has stuck to its guns with the QR code. Starbucks has managed to deliver a simple, easy, and straightforward experience to their customers without over-engineering the experience.
It could be argued a simplistic design and experience is what is lacking in other mobile payment solutions in the market. This begs the question: can other payment providers learn from the Starbucks experience? The one thing Starbucks certainly has going for it that others in the mobile payments space do not is a low average transaction amount. This certainly reduces a few barriers that other mobile payment providers need to contend with. For one, fraud becomes less of a risk. This enables security and authentication measures to be less cumbersome. Additionally, money transfer to replenish a user’s account is certainly more manageable as the amount of the transfer is predictable in both amount and frequency. From the user’s perspective, this reduces the stress of cash flow issues to the mobile payment wallet/account.
While Starbucks is relieved of certain challenges other mobile payment providers face, we can learn a thing or two from their success. While a mobile wallet requires an element of reward for the user to entice consistent, active usage, it can’t interfere with the simplicity of the payment experience. As simple as it sounds, this is where other payment apps have fallen short.
This is why we continue to highlight friction in payments.
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