Starbucks When the leading U.S. coffee retailer launched its Starbucks for iPhone app in 2011, it set an example for how easy in-store app purchases can be. Users can order their drinks within the app, and paying is as simple as scanning a digital barcode. That's probably why Starbucks reported $110 million in mobile app revenues during the app's first year on the market. Indeed, the app serves as a glimpse of how purchases will look in the decades to come.
Photo: Starbucks
By Heather Clancy
February 25, 2015

You can credit Apple Pay with dramatically raising the visibility of mobile payments technology over the past four months. Even the U.S. government now accepts it, for admission to national parks and such.

Google isn’t just watching: it just signed some formidable partners to build its own share more quickly. AT&T, T-Mobile and Verizon will all preload Google’s app on certain mobile handsets. They’ve also decided to let Google take control of Softcard, the alliance they created to control their mobile payment destiny.

Plus, you shouldn’t discount the potential influence of the world’s biggest smartphone maker, Samsung. Last week, it bought LoopPay, a technology that doesn’t require massive upgrades of point-of-sale technology.

Nor should you overlook PayPal, which processed approximately $46 billion in mobile payments during 2014. That was 20% of its total.

Why all this fuss? The answer lies in the success of the Starbuck mobile app, which supports at least 7 million mobile transactions per week.

An impressive digital payment vehicle? Certainly. But that understates the app’s powerful influence as a marketing tool. It’s already used liberally to distribute third-party software, digital music, and promotional offers. A valuable marketing channel that is mostly underexploited today.

“Access to loyalty rewards from brands is the most wanted features from consumers, and it’s the one least integrated in mobile payments today,” notes Forrester Research analyst Thomas Husson, in a recent blog about this topic.

Indeed, approximately 57% of U.S. adult smartphone users want access to loyalty programs and rewards through mobile wallets, according to his firm’s ongoing Consumer Technographics surveys.

Three other tidbits to consider:

  1. Don’t forget price comparison information. It was only slightly behind loyalty programs as a desired feature for mobile wallets.
  2. Consumers may be slow to trust. They’re more likely to consider mobile wallets from banks and credit card processors than from technology companies or retailers. PayPal stands out as an exception.
  3. Dramatic three-year increase anticipated. According to Forrester’s report in early February, just 3% of consumers have used a mobile wallet in the past three months. By 2018, however, adoption should reach 15-20% of smartphone users. That’s an impressive upside.


This item first appeared in the Feb. 25 edition of Data Sheet, Fortune’s daily newsletter on the business of technology. Sign up here.

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