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Many bankers expect Apple Inc. to help bring mobile payments into the mainstream by developing its own system for the iPhone. But the consumer electronics company could have the same effect with its advertising.
March 18 -
Visa Inc. is working with Starbucks Corp. in a promotion to improve Visa brand's status within a mobile wallet.
February 18 -
Starbucks Corp. customers loaded a record $700 million on to the Seattle coffee chain's prepaid card accounts during its most recent quarter, up 39% from a year earlier.
January 27 -
The Seattle coffee chain on Wednesday said it has expanded its smartphone payment system to include about 6,800 company-operated stores after pilot testing the technology for more than a year.
January 20
Starbucks Corp. is known for its nonalcoholic beverages, but the success of its mobile payments application has forced it to contend with a bootlegger.
Demand for Starbucks' payment application, currently available only for the iPhone and BlackBerry, is so high that a private developer created his own version for Android smartphones. His apps have been downloaded more than 160,000 times.
Starbucks has not yet launched its official payment app for Android phones. The unofficial version, called My Coffee Card, was created by Stewart Gateley, a former Starbucks shift supervisor in Tigard, Ore. Like the version Starbucks offers on other platforms, the unofficial app allows smartphone users to buy coffee at the point of sale by displaying a bar code that is linked to the user's prepaid card account.
"I suspect that this has actually changed [Starbucks'] marketing" strategy, said Phil Blank, a senior analyst who covers security for Javelin Strategy and Research in Pleasanton, Calif. Simply announcing the availability of an official Android app might not be enough to entice customers to switch, he said. "In effect, Starbucks is already available on Android with My Coffee Card."
And Starbucks would be justified in encouraging its customers to switch, he said. "If there is a security breach … who is responsible for it?" Blank said. "I'm not trying to call [Gateley's] application insecure. … It may be the most secure application in the world, but you don't know the background of the developer. You don't know what precautions he or she has taken."
Jessica Dennis said she has not had any problems using Gateley's app. The Riverside, Calif., resident said security was a concern but that she did not feel she was taking much of a risk. "I did probably vet the app a little bit more than I would an official app … [but] all you can really do with the app is buy Starbucks, so even if he was malicious, storing our generated bar codes … he really couldn't do anything that interesting with them," she said.
When Starbucks releases its Android app, Dennis said, she plans to test it but expects to continue using Gateley's app. Dennis does not use the app to reload her card account, which is a feature of both the official and unofficial versions of the app. Rather, her Starbucks card is reloaded automatically from a separate account.
"I was thrilled when I found that there was a third-party app, because Starbucks has really been dragging their feet with [Android users] and we're the largest population of smartphone users now," Dennis said.
Starbucks, whose official apps use software by mFoundry Inc., has said it developed them first for Apple Inc.'s iPhone and second for Research In Motion Ltd.'s BlackBerry because users of those devices expressed the greatest interest. A spokeswoman for Starbucks said it is working on an official app for Google Inc.'s Android, but she would not provide a date for its release.
Gateley said he developed the unofficial app for Android because, like Dennis, he was frustrated with the official one's time line, or lack thereof. "What I wanted was something that I could just quickly see my [Starbucks Card] balance from on a widget on my home screen," Gateley said.
The official apps are among the most downloaded in Apple's App Store and Research In Motion's BlackBerry App World. Apple has featured the Starbucks app in recent television advertisements for the iPhone.
Gateley, a Web applications developer, created a prototype of his app last fall to test with friends. He released a fuller version of the app, which he called Starbucks Card Widget, in the Android Market in January. It was downloadable for free.
In February, a law firm representing Starbucks sent Gateley a letter telling him, however politely, to cease and desist unauthorized use of the company's name and logo and accessing of personal information. "We appreciate your enthusiasm for Starbucks Corporation and the mobile payment experience," the letter said. "We have concerns, however, that the Widget's use of Starbucks Corporation's trademarks is likely to confuse customers."
The app also "accesses credit card and other personal information from Starbucks Corporation's customers," the letter said. "Starbucks Corporation has no control over what happens with the data once accessed by the Widget. … It is likely that customers will associate Starbucks Corporation with any lapses or perceived lapses in security."
The Starbucks spokeswoman said the company wants "to ensure our customers' Starbucks Card accounts are properly supported and secure." Starbucks is "not able to support or guarantee unofficial apps."
Shortly after receiving the letter Gateley removed his Starbucks Card Widget app and released a new version, renamed My Coffee Card. The app specifies that it is not affiliated with Starbucks and that it does not store cardholder information.
"The application is basically a front end to their website," Gateley said. "It's exactly as if you were entering the card information directly onto their website."
Gateley has tried to make money by selling a premium version of his app called My Coffee Card Pro that costs $1.99. It lets the user manage multiple Starbucks Cards. However, Gateley said the paid version accounts for only about 1% of his downloads.
Several banks that waited to release Android apps were beaten to the punch as other developers created them for customers to check balances, pay bills and other functions. JPMorgan Chase & Co. this year sent a cease-and-desist letter to Google to remove from the Android Market several unofficial apps using its name.
The Android operating system had a 34.7% average share of the smartphone market as of March, according to comScore Inc. The BlackBerry was second with a 27.1% share, followed by Apple with a 25.5% share.
