ePayments Week: Starbucks mainstreams mobile payment

Buying cappuccino with a QR code, the pros and cons of Amazon's app store plans, and best guesses on what's in iPhone 5

Here are a few stories in payment news that caught my eye this week.

Starbucks’ mobile payment plan

Starbucks mobile payment screenStarbucks continues to find things for us to do on our phones so we can avoid uncomfortable eye contact with others buying coffee. Back in 2007, it worked with Apple to create an integrated system that made it easier for iPhone and iPod Touch owners to buy and download whatever Dido or Brubeck song was playing in the store at that moment. Last year it began encouraging Foursquare check-ins by offering coupons for drinks — even if they were only dollar-off discounts for mammoth frozen treats available to a single visitor, the mayor of each location.

This week’s innovation feels a little more serious: Starbucks expanded to 7,500 stores a pilot program for paying for your latte and scones with an iPhone or Blackberry. Here’s how the mobile payment plan works: buy a Starbucks debit card and enter the card numbers into the app, then when it’s time to pay, you tap the “Touch to Pay” button and the app generates a QR code that displays on your phone screen. Hold it up to the scanner near the cash register (they won’t accept this at the drive-thru), and it debits your virtual card’s balance. You can reload the card on the Starbucks site (after a lengthy and somewhat unnecessarily intrusive registration process) using PayPal or a credit card.

The difficult thing about this is that it’s a proprietary solution for only one retailer. If Best Buy, Target, and KFC all followed with their own payment systems, checking out would become ridiculously unwieldy, dooming the digital wallet. On the upside, I have to hand it to Starbucks for forging ahead with a workable program, rather than waiting for the perfect solution from someone else. If it’s a little clunky in requiring prepayment, at least it’s an interesting experiment and an opportunity for customers in the U.S. to finally do what those in Japan and South Korea have been able to do for some time: pay for a common, physical purchase with their mobile device. It will be interesting to see how many consumers give it a try — and how many stick with it.

Amazon’s app store plans

Amazon’s plans to open an Android app store later this year are receiving a lot of attention as developers and bloggers try to weigh the pros and cons of a second, curated marketplace for the rapidly growing Android app market.

The pros seem to include that Amazon will do some pre-screening of the apps, unlike Google which lets developers post apps and only reviews them if complaints come in. TechCrunch’s Jason Kincaid believes that Amazon’s screening will be less stringent (and mysterious) than Apple’s, but obviously more rigorous than Google’s. Jason Ankeny at Fierce Developer points out that a major strength of the Amazon app store will be the deployment of its famously successful recommendation engine, which will suggest apps based not only on a customer’s app choices, but also other purchases. Buy a cookbook and it will recommend a cooking app. This could be a huge boon to the Android market, since it will introduce apps to a wide audience of users who never thought to look for them.

If there are cons, they center around whether another marketplace is necessary given Google’s app store presence on all Android phones and whether Google will enforce a rule against apps that are mini-markets, which could prevent Amazon from getting manufacturers to place a similar app on phones.

Overall, I find it tough to argue with the intelligence of this move. Amazon has spotted an opportunity to add a layer of value on top of the Android app marketplace, one that opens it up to 118 million Amazon users. I would bet that’s almost certainly worth the $99 annual developer fee that Amazon plans to charge after the first year.

Are you a developer with apps at the Android store? If so, I’d like to hear what you think of Amazon’s plans. Drop me a note.

Will iPhone 5 have NFC, 3D … and Boku talent behind it?

Even as Steve Jobs’ leave of absence from Apple had everyone wondering about the long-term fortunes of a Steve-less Apple, rumors continued to build about the feature set expected in the iPhone 5, which is due out this summer. There appears to be a growing consensus, based on patent filings and personnel hirings over the past year, that the iPhone 5 will have near-field communications (NFC) technology that will enable easy, wireless tap-and-buy transactions. Fierce Mobile Content agrees with this bet and has an even more interesting prediction: the same NFC technology could let the iPhone 5 personalize any compatible Mac by wirelessly loading the user’s apps, preferences, and data from the phone onto that machine.

Meanwhile, PopHerald.com speculated that Apple might try to compete with Nintendo’s 3DS plans by offering 3D technology on its iPod Touch or iPhones later this year. And TechCrunch reported that Apple and Google were both talking to Boku, a well-funded leader in mobile payments of digital goods that facilitates payments via your phone number instead of a credit card or PayPal. TechCrunch also wondered whether Apple was more interested in Boku’s technology, its talent, or just keeping the whole package out of Google’s reach.

Do you know something I don’t?

Almost certainly, I would bet. News tips and suggestions are always welcome, so please send them along.

If you’re interested in learning more about the payment development space, check out PayPal X DevZone, a collaboration between O’Reilly and PayPal.

tags: , , , , , ,