Progress in Mobile Payments as Starbucks leads the charge

Starbucks recently rolled out their mobile payment option for devices. Basically you can download a free app, add credit, and then display a barcode that will allow you to pay for your purchases using a third-party barcode reader at your point of purchase. This is a great step in the right direction by a major brand that will make a lot of consumers take notice of what mobile payments can mean, not to mention push the consumer goods industry toward further adoption. And Starbucks had a great case to try this out as 2/3rds of their customers are smartphone users. However, having downloaded and used it for a few weeks, there’s still a few issues from a customer experience standpoint where I’m not sold. Below are a few reasons:

• I still have to download and install a specific app – Sure it’s free and easy to install, but I still need to go get it to use it and I should (though I’m sure many have no problem making the rest of the line wait) get it ahead of time and not right as I’m paying.
• I have to have my device handy, charged, and ready – My device is habitually not charged all the way, out of my grasp, or not in hand, mostly because I’m with someone and yapping as I wait in line. I get the thinking here. Starbucks always involves waiting because their products are complicated and time-consuming to prepare, thus the downtime and propensity to pull out your phone. However, I rarely get coffee alone so that appeal isn’t there for me.
• I have to give my payment info to this specific app – I’m not particularly shy or paranoid about this but it’s sort of a pain to enter the info, even if it is just once.
• A gift card is just as functional – No secret to anyone, adding credit to a gift card at the register is easier, and then after that it’s a no thought transaction to pay. No waking up your device, finding the app, etc…

Don’t get me wrong, I like where this is going and Starbucks got a lot of PR out of it. But until a technology like NFC comes along to make this all a little easier I think I’ll probably go back to cash and cards when my credit runs out on the app.

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Will NFC be a slow starter in 2011 or is this the year?

So we’re past CES 2011, and of the many mobile and tablet device announcements, none in particular has included any big announcements around NFC (near field communication) support. Wasn’t this supposed the be the year? Where are the goods?

Since the first time I saw NFC demo’d at a Nokia research center in Cambridge years ago, I was captivated by the potential it represented in all sorts of transactions. From offers, to payments, to location based check-ins, there’s loads of potential here with very little for the end-user to do to opt-in. No specific applications needed, no sign-ups, just tap and be on your way. When you think about it, it’s really the way things should be right? Even traditional media outlets such as Businessweek are starting to pick up on NFC so awareness is getting there.

And before you ask “what about QR codes” forget about it. Despite many publishers and marketers piloting QR code implementations, it’s clearly crashed and burned before it ever got off the runway with NFC coming. Think about the user experience of QR codes in this hypothetical scenario:

Customer see’s a QR code in a display or printed advertisement. Assuming that the customer both knows what it is and what to do next they pull out one of the many devices on the market, most which ship without software to read the codes. Ok, let’s assume the ad tells them the name of one of many campaign specific QR code readers out there and the customer is willing to search it out and install it. Several minutes later (if they’re patient and have a good connection), bam! They’ve successfully scanned the code to what must of been a pretty compelling and clearly articulated value proposition.

Now replace that whole experience with a simple tap of a NFC supported device. The customer sees the logo at the top of the post, knows what it is, and taps away. The customer doesn’t need to think to opt-in, and they can review or fulfill any of the thought process steps involved later at their convenience.

So is the year for NFC? It’s early and I think there is plenty on the horizon. But if anything, Google’s recently released Samsung Nexus S with built in NFC support should be an industry driver, just like the features that the Nexus One bore a year before (faster processing, more memory, etc..). NFC is an eventuality, it’s how soon it gets here is what remains to be seen.