The latest in contactless checkout has arrived, and it could stick given its influential adopter: Starbucks. The coffee giant has begun to roll out what it calls “Scanless Checkout,” which goes a step further in reducing transactional friction. Rather than taps and swipes, your phone never exits your pocket.
Specifically, this is being tested in Starbucks drivethrough locations. After ordering, payment is then automatically validated and activated based on your GPS location via the Starbucks app. This replaces the practice of pulling out your phone, teeing up your unique barcode, then holding it up to be scanned.
From the user perspective, the Starbucks app will show notifications to opt into the new system. Once enabled, users check in on the mobile app when they enter a given drivethrough. When placing an order, they tell the barista their name and that they checked in. Then the rest happens in the background.
Unsung Hero
To be clear, Starbucks has already achieved more than anyone when it comes to mobile ordering and payments. Its non drive-through systems work flawlessly to order something on the go, swing by, and pick it up. No ordering lines and waiting for barista work… just show up and grab your coffee.
Beyond being a thoughtful execution on paper, this has been extremely popular among Starbucks users. More importantly, it has paid off for the company. After several years of runway, its Mobile Order & Pay system now accounts for 74 percent of U.S. revenue according to the company’s Q2 earnings.
For all these reasons, we’ve long pegged Starbucks as the unsung hero in the world of mobile payments, along with Uber. These systems offer real value in saving the most valuable asset: time. Avoiding long coffee lines or transactional processes at the end of a taxi ride have tangible value for everyday users.
When mobile payments were first touted a decade ago (and some still today), most offerings failed to accomplish this simple principle. Rather, they were solutions in search of problems. Tap your phone rather than swipe your credit card… BFD. Consumers need more than that to upend deep-rooted habits.
Gathering Place
The latest scanless move from Starbucks aligns with its longstanding philosophy, albeit in a narrower use case. Starbucks drive-throughs are less prevalent in the grand scheme, seen more in rural areas. Nonetheless, it could streamline checkout at these locations, not to mention yield optimization.
The latter happens as Starbucks is able to speed up its delivery lines and boost daily revenue through higher volume transactions. Some of those dollars are otherwise lost as customers lose interest when they see cars snaking around the parking lot. Expediting that line could have a real revenue impact.
The same yield optimization principle stands behind Starbucks “order-only” locations. Rather than coffee shop vibes and status as a gathering place (which is still important to Starbucks’ brand), these order-only locations accommodate folks who just want a coffee quick. And the order volume shows.
Expect more transactional and logistical innovations from Starbucks. Meanwhile, Scanless Checkout is in internal testing but likely rolling out soon. Once it does, if you live near a Starbucks drive through, think about stress testing the system. Let us know how it went and your next cup of coffee is on us.
