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Coffee shops scan new payment ideas

From the January 2018 issue.

New technology is changing the traditional point of sale experience.

Cafe X

From robots to chatbots, coffee shops are eager to install new technology that speeds up the throughput of customers. While some innovations are already in place and changing the buying experience, others are waiting in the wings and will either be transformative or judged too radical for the mainstream.

Starbucks is a leader in mobile payments, with a scan-and-pay service that now accounts for a sizeable chunk of its point-of-sale transactions. The coffee giant was early into mobile payments (it launched in 2009) with its no-frills service that effectively leveraged its existing infrastructure (the barcode scanners in stores). Users only need to download the Starbucks app to their smartphone. When making a payment, the app displays a barcode which the customer holds up to be scanned by staff.

The service’s debut was several years ahead of arguably more technically sophisticated services such as Apple Pay and Samsung Pay which use the touch-and-pay technology called Near Field Communication (NFC). Those services are used in the US and other countries around the world.

Other US food and beverage chains that serve coffee, including Dunkin’ Donuts and McDonalds, have also implemented point-of-sale technology that enable customers to pay using their mobile phones, although what makes Starbucks unique is its decision to build its own payment system from scratch.

Smaller chains, or single shops, do not generally invest in their own systems, but they have been exposed to a plethora of offerings in recent years. Many have invested in mobile point-of-sales systems. Arguably the most well-known of these is Square, the firm set up by Twitter CEO Jack Dorsey, which is present in the US, UK, Canada, Japan and Australia. Rivals include Payleven, SumUp and iZettle. All have broadly similar products: they offer café owners a dongle that can slot into the bottom of a standard iOS or

Android tablet to transform it into a payments terminal for accepting contactless payments via card or phone.

The point-of-sale firms have typically targeted small coffee shops by offering cost savings on their credit and debit card processing fees. In addition, they claim to offer a faster set up and improved data analytics over traditional payments terminals.

In 2015, Starbucks launched its Mobile Order and Pay service in the US, which enables customers to place an order and pay via the Starbucks app on their phone, before picking up the beverages in store. Effectively, this service moves the point of sale from the physical store to wherever the customer happens to be.

It achieved a rapid penetration of the marketplace in a relatively short time, particularly at the busiest times of day. However, earlier this year the company admitted demand from mobile ordering was leaving baristas in popular outlets stretched during peak periods, an unforeseen side effect from the service’s growing popularity. The company was forced to deploy more staff at peak times to deal with growth in demand, as well as temporarily turn off marketing of the service so not to draw even more users to it.

According to Starbucks’ most recent quarterly numbers, covering the three months to 1 October, Mobile Order and Pay now represents 10 per cent of total transactions in US company-operated stores. And the company is still intent on rolling out the service further, including internationally.

Speaking about mobile ordering in general (he has not tried the Starbucks system), the 2016 UK Brewer’s Cup champion and writer for the subscription-based Barista Hustle community, Jem Challender, says he is “not persuaded by the case for using such services for espresso-based drinks which deteriorate in minutes if not seconds”, a risk if a customer does not collect their drink promptly.

“A latte can pretty quickly turn into café au lait,” he explains. “In addition, I quite enjoy latte art, which would also degrade.”

Challender, who co-founded the highly-rated London coffee shop Prufrock, is more impressed by the Starbucks concept store where customers can walk in and place an order on their phones before the coffee is brought to them. “It’s a labour-saving approach that frees up staff to talk to customers about what they are drinking. I like that.”

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