So I decided to get a Frappucino at Starbucks yesterday. I walk into the store, wait in line for a few minutes and then finally... I can order. I get a Mocha Frap, with skim milk, no whipped and ˝ pump of syrup since I don't like it sweet. I pay with cash, get the change, put money in the tip jar and then wait for the barista to hand me my drink. Pretty typical right? Well that might change.
UPDATE: Check out The Path to Purchase via Pay with Square. These pictures from the iTunes store for the Pay with Square App show location based services... not only do you pay with the app, participating vendors can incentivize you to visit their store or restaurant. All this courtesy of WiFi and GPS.
Pay with Square - Uses Your Photo and Name
Starbucks announced that they will be using the Pay with Square system in 7000 + US stores starting this fall. You know Square. The little plastic "square" that plugs into an iPhone or Android that allows small merchants to accept credit cards with just a swipe. It is a great product and I use it for my own business and for taking last minute attendees at food entrepreneur seminars. Square's selling point is a low 2.75% transaction fee and no other charges... and the "other chargers" can really add up for small transactions such as those that occur at Starbucks.
Pay with Square allows small merchants to use an iPad as their cash register... you say so what? The cool thing is "Pay with Square" knows when a customer enters the store. It also allows the merchant to track sales by item. If you register with Square, your name and photo appear on the merchants iPad. So when you are ready to pay, the cashier knows it is you and with a swipe of the finger, you pay virtually through your square account. Square did not confirm this... but this must occur via your Smartphone Wi-Fi connection, which you may already know is on by default unless you manually turn off Wi-Fi.
Starbucks will be "integrating Square into our existing POS and scanners. We're not using iPads." according to the company.
Starbucks to Save Millions with Square
Anyone in business knows the credit card transactionscan add up and looking at Starbucks 2nd quarter US revenue at $2.4 billion if they save just 1% point moving to square that is $24 million! Oh I forgot. Embedded in the press release was this "Square will process Starbucks U.S. credit and debit card transactions".. does that mean the current credit card transaction vendors are gone? A company spokesperson said the projected cost savings are "Significant - but we're not providing a number right now."
Does Starbucks Want to Buy Square?
Starbucks will invest $25 million in Square as part of the company's Series D financing round, why? Well it certainly will save millions of dollars and adds another mobile payment option or their customers which is becoming a hot topic for QSR's.
Starbucks is all about the total customer experience and Square gives them the technology to enhance the experience. And $25 million is a cheap investment for Starbucks. So let's envision...
Why Does Starbucks Want Pay with Square?
I just related my experience buying a Frap the conventional way. Great entrepreneurs are visionary and can see what others don't, so let' envision here to see how the Pay with Square scenario might work given the advances in mobile push and location based technologies.
I pull into the parking lot of my local Starbucks... the Wi-Fi detects I am there and my picture and name already appears on the Starbucks-Square video terminal in the store. The sales associate sees my last 3 purchases and already knows what I may want. As I walk through the door, the Wi-Fi connection pushes a message to me "Hi Dom, do you want your usual Frap, no whip, skim and not sweet"? I push the "Yes" button. Arriving at the cash register the associates says "hi Dom, can I get you anything else?" I say no... she (he) swipes the screen, I have just paid and my Frap is already waiting for me at the barista counter.
QSR Mobile Payments and Engaging the Digital Consumer
So how might Starbucks envision using this to improve the total customer experience? Or for that matter any QSR operator? The company says "This initial implementation is just the beginning. The two companies plan to work together on everything from mobile ordering to taking advantage of Pay with Square's innovative Pay with Name feature."
Brands today are going beyond Target Marketing. They are going beyond customer segmentation (dividing up a target into smaller segments). They want to know you! Mobile gives brands the ability to interact with you at the time of purchase. The food industry calls this Shopper Marketing.
QSR Industry Embracing Mobile Payments
Burger King is testing mobile payments, maybe even McDonalds. TGI Friday's has an app that runs your bar tab for you. Kraft has their iRecipe app that enables them to see how you prepare meals to suggest recipes and special offers. Dominos has $1 Billion in revenues from Internet orders and over 7% from mobile.
Do you think you can ignore mobile and be successful in the food and beverage market?