Starbucks Expands Payment, Rewards Options in App

Need to Know

• Payment options will now include cash, debit, credit, mobile wallets, and Rewards cards.
• Beginning this fall, Starbucks Rewards members will earn 2 Stars for every $1 spent on a Rewards Card, vs. 1 star for every $1 spent via cash, debit, mobile wallet, or credit
• The inclusion of new mobile payment options is part of Starbucks’ aggressive digital strategy.

Analysis

Starbucks is making its mobile app and Rewards program more appealing, adding new payment options and adjusting its Rewards scheme to increase engagement and draw in a larger customer base.

On Wednesday, the coffee chain revealed that it would be expanding its in-app payment options, now allowing customers to pay using cash, debit/credit, select mobile wallets, or Starbucks Rewards or gift cards. In addition, Starbucks will be shifting its Rewards program pay-out scheme, offering 2 Stars per dollar spent using a Rewards card or gift card, or 1 Star for every dollar spent using another payment option. The latter change will be rolled out on the Starbucks app in the fall.

“Having a connection with our customers, whether in our stores or digitally, allows us to anticipate their needs and deliver the products and experiences they are looking for,” Brady Brewer, Starbucks’ CMO, said in a statement. “Our customers have shared with us that they would like more options to pay and earn Stars in the app as a Starbucks Rewards member, in addition to the Starbucks Card. We expect the expansion of payment options will appeal to an even wider customer audience and deepen engagement with our members.”

The app upgrade is just the latest in a series of digital improvements and expansions made by Starbucks—and it’s paying off. In late 2019, the company announced Deep Brew, an AI program that would allow Starbucks to streamline operational tasks and allow staff to focus on increasing customer relationships and enhancing customer service. The Rewards program, too, has been a huge boon: In Q1 this year, Starbucks reported that its Rewards loyalty program had seen a 16 percent year-over-year increase in members. 

In the wake of COVID, Starbucks’ digital presence has allowed the company to maintain a healthy bottom line: the company expanded its Pickup locations, which rely on a digital-first ordering experience, in June; months earlier, it leaned on the functionality and huge user base of its app to reopen 90% of its bricks-and-mortar stores, offering pickup and delivery options only.