Peter Lim

170055

Starbucks Canada: The Mobile Payments Decision

Starbucks Canada was introduced as an autonomous branch, given the authority to make

decisions for several key areas including customer relationship management, e-commerce and

mobile, and the Starbucks card. Tim Hortons, one of the most prevalent retailers of the Canadian

coffee industry, made outstanding progress due to its advancement in the fields of mobile

payment.

Which mobile payment service is best for Starbucks’ setup considering they want to

surpass Tim Horton’s advancement? Presented with a lot of options, there are a lot of factors to

consider when rolling out new technology. In August 2012, Starbucks and Square collaborated,

introducing Square Wallet - allowing consumers to process transactions using their smartphones.

However, the introduction of new technology became more of a conflict for the baristas since

they were not informed how to use it. As mentioned by one of the employees, “I had to figure it

out myself. They did not even tell us they were going to do it. I came in one day, and they had

put a new button on the screen. So, we all had to just figure it out.”

Based on the case, I can hypothesize that the conflict lies within the USA’s branch

management - specifically, the lack of employee training; and, the payment system’s

incompatibility with the business’ current process. One factor is inability of the barcode scanners

to process two-dimensional barcodes. Another is a physical store’s architecture and the number

of concurrent users that the GPS functionality can process. If for example 10 customers enter the

store at the same time, will the GPS feature be able to extract the information from each of the
individuals? In the context of architecture, the NFC feature of the technology may be having

conflicts based on distance.

In order to prove this hypothesis, information regarding the training process of Starbucks

USA’s employees must be gathered. This includes data about Square Wallet’s capacity on

processing transactions from a certain distance, in order to prove that a physical store’s

architecture might be the factor causing the technology’s inconsistency. Considering that the

employees were not trained opens up a general problem, which will be on the end of the

company’s human resource management - and not the newly introduced technology. In relation

to the target market of Square Wallet, back in 2013, Blackberry and selected Android devices

were only capable of NFC. 43% of Canada’s population were Android users, and 19% were

Blackberry users. 10% of consumers used their smartphones to pay bills, and 6% to purchase

products. In order to prove NFC’s compatibility with the company’s business process, more

specific data needs to be gathered regarding the percentage of consumers purchasing products

from the coffee industry using their smartphones. If we were to specify, then we can estimate

that among the 6% of consumers, the number of non-Blackberry users and non-selected Android

users will be factored out - roughly estimating about below 6% of the Canadian population using

smartphones are the target market of the mobile payment decision. This opens up the question of

necessity if Starbucks really needs to advance its mobile transaction process to the next level of

automation, or if the Starbucks card is sufficient for their current business process.

In proceeding and discussing the action plan for Starbucks Canada, the first step in

solving a problem is to first refine the most important assets of a business, their people. The

employees must be trained to use the newly introduced technology along with its limitations.

Without the proper way of training employees, any solution introduced to the company will
produce the same results and problems. Considering the fact that 80% of Canada’s merchants are

not enabled in accepting NFC-based payments, this opens up an opportunity for Starbucks

Canada to implement the slow-paced change of transitioning from chip and PIN payments to

NFC-based; and on the other hand, may also present a risk for consumers having a hard time

adapting to the technology. The next step of the action plan is to retain the old transaction

process for customers, while also giving them the option to finish their transaction using the new

mobile payment feature. Lastly, since we lack data on which specific branches of Starbucks

Canada have the greatest number of customers, then the distribution and installation of the

technology will first take place on the top 20% best performing (270) branches of Starbucks

Canada. This will give off a significant amount of data, which could be analyzed in order to

produce a better and more effective action plan in the future.