In most versions of the current model, customer payment data are stored on the Internet for access via smartphone applications, such as the mobile version of PayPal’s site or specialized apps developed by a particular merchant. Starbucks(SBUX) customers can download the company’s app to their phone, load it with a credit or debit card, then pay at most of the coffee chain’s 11,437 U.S. locations by opening the app and waving their phone under a scanner. The company says more than 11 percent of payments in the U.S. and Canada are now made with mobile devices, thanks in part to a discounts and rewards program.
Other merchants have toyed with variations on that model. The 26,000 U.S. locations of sandwich chain Subway don’t have specialized barcode scanners, but their registers can print barcodes for a customer with the company’s app to scan with a phone camera and use to authorize an online payment. Chipotle Mexican Grill’s (CMG) app lets customers order from the road to avoid standing in the chain’s serpentine lunch-hour lines. Besides reducing barriers to payment, this can give retailers a much better way to contact a customer—and a closer look at her long-term behavior, says Richard Crone, chief executive officer of payment advisory firm Crone Consulting. “The real value is that they now know who their customer is and can reach out to them at any time,” he says.
Photo credit Starbucks
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