Who do you think has the top mobile payment app in the US?

Apple? Google? Maybe Samsung? 

None of the above. 

It’s Starbucks. 

Of the 55 million Americans who used a mobile payment app this year, more than 40% will have done it on the Starbucks app. 

It’s an amazing example of how a strong brand can drive technology adoption and new behaviors. Loyalty rewards, innovation and convenience brought the coffee shop into a technology leadership position. 

But it’s not a strategy that can be readily copied.

Instead, it shows how far behind the US is in mobile payments. Starbucks’ brief dominance will be an interesting footnote in the march toward mobile payments as the shopping experience in the US is revolutionized. While the US struggles with chip credit card readers, we can see what that future looks like by looking into the crystal ball that is China. 

In 2017, mobile payments in China totaled over $13 trillion USD. More than 90% of these transactions were done through WeChat Pay (owned by Tencent) or Alipay (owned by Alibaba). By comparison, US Mobile payments for all of 2017 were less than $50 billion.  These Chinese transactions weren’t Fortnite skins or other digital goods. They were retail sales.  It shows how Alibaba and WeChat are bursting beyond their digital roots.

By applying a common tech strategy of winner-takes-all through aggregation to bricks and mortar retail, the two giants are forging partnerships with both mom and pop stores and larger Chinese chains. These partnerships provide retail outlets with “digital make overs”, providing them with AI, in-store pickup, and of course easy mobile payments. As Axios reported, they are “corralling businesses into branded, self-contained, AI-infused universes in which only their affiliates capture the profit.” The retailers agree to buy their raw goods and handle all transactions through Alibaba or Tencent. It turns into a relationship very similar to that of an Amazon dropshipper…. only in the real world. 

What will that look like in the US? 

Imagine you were one of the many struggling nationwide retailers and Amazon came to you with an offer to provide your stores with a digital make over. The only catch is you have to use Amazon Wallet as your only payment option. Would you do it? I suspect for some, it will be their only chance at survival. 

This isn’t just about survival of the dinosaurs, however. What passed for ‘convenience’ a decade ago feels more than antiquated today. For local retailers, there will be an opportunity to remake their businesses by applying a coat of digital paint. New entrants will be able to create a disruptive shopping experience that is powered by tech giants, without needing any of the domaine expertise. Grabbing a gallon of milk from the store down the street can be easier, and it’s about to be. 

In their wake will be ‘cash only’ signs. 

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