Two years after it launched its payment app, Starbucks remains the unchallenged leader in mobile payments. From just about any perspective, from use frequency to volume to user experience, the Starbucks mobile payment app is the gold standard. And that doesn't seem to be changing anytime soon.

During an earnings call last week to discuss its Q1 results (a period in the company's fiscal year that includes the holiday season), Starbucks CEO Howard Schultz highlighted just how big the mobile app has become, and just how important it is to the coffee chain.

Overall, the Starbucks gift card accounts for 25 percent of U.S. tender, Schultz said. He noted that the Starbucks gift card was likely the most popular gift item of the 2012 holiday season. More than $1 billion was loaded onto Starbucks gift cards in the quarter (a 25 percent increase over the same period last year), and one in 10 adults in the U.S. received one as a gift.

What's more, 20 percent of card transactions at Starbucks locations were conducted using the mobile app, Shultz said. "Over 7 million customers now use one of our mobile payment apps, translating into 2.1 million mobile payment transactions each week, with hundreds of thousands of additional Starbucks mobile app downloads each week."

It wasn't just about payments either. The integration of the Starbucks loyalty card with the payment app meant that the company added 1.4 million members in Q1 of 2013. That's an increase of 86 percent over last year's 778,000 new members for the same quarter, Schultz said.

"As our Q1 results demonstrate, the momentum we’ve built throughout 2012 carried through holiday and into Q1 in 2013," Schultz said. "But we are just getting started and only beginning to see the benefits of the convergence of our retail, CPG, and social and digital media initiatives."

Schultz said Starbucks is committed to building on its accomplishments in mobile payments and promised additional initiatives in the near future that will leverage the company's success in the space.

Schultz also briefly discussed the company's ongoing relationship with Square. Starbucks began accepting the Square mobile wallet at its 7,000 locations and Square began processing Starbucks' credit and debit transactions during the quarter.

"I believe that we are in the nascent stage of being able to leverage and integrate social, digital, mobile, our investment with Square and the loyalty program into a very significant and robust opportunity going forward," Schultz said.

For more stories like this, visit the Restaurants research center.

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User Comments – Give us your opinion!
  • Cris Calitina
    38515388
    The 4th Payments, Settlements, Remittances Asia 2012 (30 – 31 May, 2013, Manila, Philippines) is your gateway to efficient and fraud-free transactions, monetizing the best technologies, cutting transactions costs and being the bank of choice for the 21st century. Call us at +65 6818 6344 or email us at payments@arcmediaglobal.com or visit http://www.arcmediaglobal.com/payments.
  • Margaux Panlilio
    37943378
    If starbucks didn't limit to one MPOS provider, for sure we will be looking at 50% sales increase and more than a 100% loyalty card member increase before the end of q1. I am an mPowa (www.mpowa.com) user, and if my mpowa is compatible to starbuck's app then I could be purchasing all the things I eat and drink when at work in a starbucks!
  • Thomas Miezejeski
    37182731
    Starbucks was a pioneer in the gift card market 10 years ago. We all know what has happened with gift cards since. How long will it be before other major retailers realize that mobile payments are long term replacement for the credit card.
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