Starbucks outage limits digital payments (SBUX)

The outage, which began as early as late Monday and was mostly wrapped up by late Tuesday afternoon, reportedly forced stores to stop accepting any electronic payments, making them accept just cash or give out free drinks.

The glitch was a result of a “routine overnight software update,” and has no evidence of malice or wrongdoing by a third party.

The incident could have had a vast impact on Starbucks.

Players must focus on security and reliability in tandem with innovative developments in payments technology. Starbucks’ outage was due to an internal problem rather than external security risks. But the hack still posed significant inconveniences to consumers, and likely cost Starbucks a hefty amount of daily business. With digital and mobile payments only poised to rise moving forward, the potential losses suggest that retailers and point-of-sale (POS) firms need to remain attuned to reducing risk, through security precautions and reliability tests, or risk loss.

Retailers like Starbucks and Dunkin' Donuts are winning over consumers with their mobile wallets — apps developed by stores to make it easier for their customers to pay, and to deliver valuable perks.

And these retailer wallets are leading the overall mobile wallets industry, thanks to their ability to rapidly push out innovative features like rewards programs, coupons, mobile order-ahead, and custom marketing.

This may be surprising considering that retailer mobile wallets can be used only at a specific retailer’s locations; in contrast, popular universal mobile wallets like Apple Pay and Samsung Pay can be used at multiple retailers, as long as users are using the necessary smartphones.

Ayoub Aouad, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on retailer mobile wallets that assesses what makes them so successful and which retailers can most effectively leverage the technology to push sales, traffic, and average ticket size. The report also outlines what makes these mobile wallets attractive, and discusses some of the advancements being made in the payments industry that will affect mobile wallets' growth rate.

Here are some key takeaways from the report:

Retailers with large addressable user bases who are loyal, repeat visitors, will see their mobile wallets continue to be popular with consumers, especially as there continues to be slow merchant adoption of near-field communication (NFC) technology as well as weak offerings by universal mobile wallets like Apple Pay and Samsung Pay.

Loyalty programs will be a significant driver in retailer mobile wallet adoption. Companies like Starbucks and Dunkin' Donuts have been able to leverage their loyalty programs to acquire mobile wallet users, which, in turn, has driven store traffic and conversion rates.

By leveraging these programs, sales are expected to grow at a five-year compound annual growth rate of 68%.

However, adoption will begin to decelerate as a result of increased competition by 2020. As universal mobile wallet players begin to add effective loyalty programs and coupons to their offerings, adoption for retailer-based mobile wallets is likely to slow down because these offerings are their main marketing points.

Explains what hurdles universal mobile wallets have faced.
Details what features retailers have adopted into their mobile wallets that have been successful

Analyzes the use cases of retailers that have successfully leveraged their mobile wallet offerings to push growth.
Identifies how universal mobile wallets will eventually slow growth for retailer-based mobile wallets.

Interested in getting the full report? Here are two ways to access it:

Starbucks outage limits digital payments (SBUX)

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