Friday, October 24, 2014

Starbucks Customers Use Mobile Payments 4 Orders of Magnitude More Often

In 2014, possibly $1.6 billion worth of in-store U.S. retailer purchases will be handled by mobile payments, eMarketer estimates.

At Starbucks, mobile payments account for about 15 percent of purchases. If Starbucks processed at least five million transactions a week early in 2014, some estimate that Starbucks could have processed $1 billion in transactions by the end of 2014.

If so, Starbucks might well represent 63 percent of all in-store mobile payments. That might seem high. It might be.

Everything depends on the assumptions one makes about the volume of 2014 proximity payments in the U.S. market.

Some estimate U.S. mobile payments transaction volume as high as $162 billion in 2014. Others estimate U.S. mobile payments using proximity at less than $4 billion in 2014.

If the former is correct, Starbucks mobile payments represent only a bit more than half of one percent of U.S. retail transactions. That strikes us as too low.

At the latter figure for total U.S. proximity transactions, Starbucks represents about 27 percent of all transactions, which to some might seem more a reflection of reality, if still possibly high.

Still, everything hinges on one’s estimates of total proximity payments, which Javelin Strategy has estimated at less than $1 billion in 2014.

About the only safe statement is that Starbucks customers use mobile payment at rates four orders of magnitude greater than all retail in-store retail customers.

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