Let Your Smart Phone Buy Your Starbucks

Now you can pay for that latte with cash, credit card or mobile phone.

Starbucks (SBUX) , which tested mobile payments in select stores and Target outlets in the past year, expanded the program nationally to all its 6,800 company-owned stores starting today.There are a handful of mobile payment experiments in operation now, including Bling Nation in Palo Alto, Calif., and Mocapay in Denver. But this is the biggest rollout to date for mobile payments, says Gwenn Bézard, analyst with the Aite Group, who follows mobile payments. Tech analysts expect substantial growth in mobile payments in coming years as more of us lead our daily lives on our phone.

“This is a more convenient way to pay,” says Starbucks Vice President Brady Brewer. “Your wallet or purse isn’t always with you, but the mobile phone is.” Customers pay using apps available on their iPhones or BlackBerrys. Download the app, and fund it with your credit card. When you reach the barista at the counter, hit the “pay” button, show the bar code, and scan it to complete the transaction. Starbucks says it’s working on an app for Android phones.

“Starbucks is using an interim technology that’s available today,” Bezard says. But he thinks the future of mobile payments will be based on a technology called near-field communications (NFC), which embeds a payment chip inside the phone.

NFC is popular in Asia, where many phones already have built-in chips, and retailers to support them. Juniper Research says $200 billion will be spent worldwide via mobile payments by 2012, up from $100 billion in 2010. Verizon Wireless, AT&T and T-Mobile recently announced plans for a joint venture, Isis, to offer NFC purchasing via phones. Testing is scheduled to begin next year.

The success of its gift card sparked Starbucks’ interest in mobile payments. “Customers liked the speed of the card,” Brewer says. About one in five retail transactions are done with the card, and customers have loaded more than $1.5 billion onto them, Starbucks says.

Starbucks began testing mobile payments in 2009. To expand nationally, it had to retrofit older scanners with new ones that could accept the bar code from the apps. “We’re going to see big adoption,” Brewer says. He wouldn’t say how much the changeover cost the company.

Source: USA Today