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2014-10-23 07:20:27
Bribing the users
Apple Pay may not be as successful as Starbucks in changing America's payment habits
Oct 21st 2014 | SEATTLE | Business and finance
AFTER revolutionising the coffee market, Starbucks has spent the last few years trying to do the same to how its customers pay for their beverages. Rather than using cash or card as payment, customers have been encouraged to pay by pulling out a smartphone, opening up Starbucks' payment app and scanning a code at the cash till. The scheme has been a qualified success so far: more than 15% of transactions in Starbucks' stores are now made with the app, up from 10% last year. But whether Apple's new mobile-payment system, Apple Pay, launched on October 20th, will be as successful as Starbucks' is much less certain than some boosters hope.
Apple hopes that it can join in Starbucks' success with its new Apple Pay mobile-payment system. In theory the new system should help the customer by increasing the speed of transactions. Once a credit card has been entered in Apple Pay which is almost as easy as snapping a picture of the card it will be permanently accessible on that smartphone, and available for payment with the scan of a user's fingerprint on its built-in sensor.
But whether it will prove popular with retailers and customers is questionable. So far, only a few banks have signed on to allow their cards to be processed through Apple's system. And only 220,000 outlets currently accept it as payment which is not that many in a country of 317m people. Technically proficient staff are also needed to accept the payments. Starbucks' baristas are already well versed in the vagaries of its app's function on different types of smartphone, but this is not necessarily going to be true of every coffee shop or retailer across America.
Starbucks has also encouraged take-up of its app by offering its users a loyalty programme, free drinks and other extras. But because Apple Pay may be used without an app, just with a tap and fingerprint, it is not yet clear how incentive schemes can be tied into Apple Pay, if at all. Without a carrot to dangle, as Starbucks does, Apple may find its customers less willing to bite.