Starbucks uses alternative payment to drive growth
The deal also promises to be lucrative for Starbucks. The coffee vendor has, for some time, used the marketing of payment as an integral part of their business model, with spectacular results. The company has successfully used its Starbucks Card, a prepaid, rewards-style debit card, to increase growth. Domestic sales pegged to the use of the card were a mere 13% in 2006, compared to 27% for last year. Obviously, the promise of a free cup of coffee is a strong incentive for Starbucks customers.
Starbucks later added an app for smartphones using Google's
For such a young company, Square has never had problems attracting investment interest from the big boys. Last spring, Visa
Starbucks will be a winner here, too. The business savvy here is unrivalled, and the company has boosted sales efficiently and consistently by offering customers choices in payment styles. An interesting note here is that it is rumored that Starbucks rejected other e-payment systems, and actively shopped the deal to Square. Starbucks obviously sees something in Square that it likes -- and believes that offering customers its payment system will send sales soaring. And that sounds pretty sweet for investors, too.
Square and Starbucks will undoubtedly make a big splash in the mobile payments arena, but other big names may be planning to jump in soon, as well -- including Apple. Do you want to keep track of Cupertino's plans and get all the info, such as risks and opportunities facing the company, that investors need to know? If so, I invite you to try our premium report on Apple, which outlines key areas investors must pay attention to. The report comes with a full year of updates, too -- to access it, click here.