Payments and loyalty go hand in hand

News that Starbucks UK customers can now pay for their coffee and bun by swiping a bar code at the checkout using their iphones, shows just how fast mobile payments are moving. The charge will be made against customers’ loyalty cards and is already running in the US since January, with 26 million transactions already processed.

The scheme will enable Starbucks to reward loyal customers based on this new type of behaviour; customers who pay with a registered Starbucks Card can get a free drink every 15 visits. After 50 visits they move from Green to Gold Level and get extra benefits such as free espresso shots, soy, syrups and whipped cream.

Customers have simply to load the My Starbucks Reward onto their mobiles (an Android version is coming soon).

The success of the scheme should be judged against the fact that Starbucks customers are not price-sensitive. Coffee chains that compete on price would not be advised to adopt a similar scheme as a route to the loyalty that they cannot engender in other ways.