Starbucks Schools Other Retailers on Mobile Payments

Since May, Penn State student Sarah Espinoza has been hitting her local Starbucks in State College, Pa., for double-tall, no-water soy dirty chais two to three times a day, about double her usual rate. This spring she downloaded a Starbucks mobile app that lets her pay with an iPhone 4S and notifies her of special offers. “They send me daily specials, and that makes me want to run to Starbucks,” she says.

The Seattle-based coffee giant’s year-and-a-half-old mobile payment program may be the largest of any retailer in North America. Even before its recent $25 million investment in San Francisco mobile payments startup Square, the company had been processing a million mobile-phone transactions per week. “What mobile payments allows is an unprecedented relationship between us and our customer,” says Adam Brotman, Starbucks’s chief digital officer.