Starbucks brings M-Payments to market – and no NFC in sight

If you aren’t reading this in Starbucks right now, there is I’ll wager, every chance that you will be recharging your batteries in said coffee emporium at some point today. Its has become part of the nomadic life of us telemedia people: we all moved to the country, but find ourselves trying to have meetings in London, so we head to ‘Buckies… you know how it is.

Ironic then that, while we’ve pumped so much money into the Seattle giant’s coffee coffers doing our business, they are leading the revolution in billing and m-payments that doesn’t use any of our billing tools and certainly marks another milestone in the shifting fortunes of operator billing.

Starbucks in the US is pioneering the use of mobile as a payment tool, harnessing the power of the company’s existing loyalty-cum-payments card and making it mobile. Unlike other coffee houses that offer loyalty cards that veer between the slick (Costa’s electronic credit card stylee offering) to the utilitarian (Café Nero’s cardboard number – frankly my favourite, its so low tech its cool), Starbucks has always taken a different tack, offering loyal users a charge card that they can load up with money and get more credit put on it as they loyally get fried on caffeine.

Whether the long term plan has always to be to turn this into a mobile or even multichannel payment tool is a moot point; today they have seamlessly got their be-chino-ed denizens to start getting their iPhone scanned to not only get loyalty points, but also to pay for their coffee.

This is remarkable and I think is the breakthrough moment for mobile as a contactless payment tool. I was holding out for iPhone 5 with its built in NFC and probably some sort of chip-and-PIN chip in April, but I think Starbucks may have stolen a march.

OK, so the payment tool uses a barcode that the barista has to scan – and there are many inherent problems with that, not least ear goo smears – but the whole thing is based around web enabled app on the phone. This is genius. No need for built in chips, no need for special readers and all that, it's a goddam app.

This changes everything. In app billing is exciting and has multifarious uses in our world, but using apps as a stored value gateway looks to me like a pretty simple way of turning all the smartphones already out there into payment tools – and if we are relying on barcode scanning technology, then the investment for the merchant is similarly small.

The upshot for telemedia is profound. Getting people – even geeky people – to use their mobiles to buy everyday things such as cups of coffee cements the role of mobile in consumers’ minds as a payment tool. That can only enhance the uptake of other mobile payment tools.

But there is a danger: increasingly on my travels around the offices of media companies, games and gambling firms, content providers and retailers I am getting a strong message that operator billing is not for them. While reverse billing has been extremely useful in many markets for many years, the rise of online-registered cards, the proliferation of debit cards and even the rise of things like Ukash are seeing PRS being eroded. Operator reluctance to improve payout rates isn’t helping much either.

But with Starbuck’s payment app comes home: it shows how smartphone tech can be used to create payment tools, and with the coffee house leading the way, telemedia players have a huge opportunity to deliver new billing tools that any merchant, selling any thing, can use.