Recently, while I was reading web developer/man of letters Vlad Oprică’s article about microstransactions, I was struck in particular by his example of Starbucks coffee as an incremental expenditure common to many consumers. As he rightly points out, most people would probably balk at the notion of shelling out $60 or $70 at a time for a month’s worth of fancy coffee or coffee-esque beverages (that’s about what you’d pay if you were to have one Starbucks Grande Latte 4 or 5 times per week in a given month). Nevertheless, the average regular coffee shop patron doesn’t even bat an eye when asked by a barista for $3.50 in exchange for his or her drink of choice.
As a fairly regular Starbucks customer myself (confession: I like Vanilla Lattes), I was quite intrigued when I read of the success of the Starbucks Mobile Card iPhone app. This is an interesting development not only because it represents progress in the realm of transaction efficiency, but also because it’s a perfect example of the employment of the sort of intermediary “currencies” Vlad discusses in his article.
We’re all aware that the cash-for-goods-or-services model represents the most straightforward type of transaction possible in a modern economy (last time I checked, the barter system was no longer en vogue). Although using the Mobile Card is more efficient than using cash to buy a coffee, the money actually follows quite a tortuous path from your checking account to the Starbucks coffers.
Here’s a hypothetical scenario: let’s say I walk into my friendly neighborhood Starbucks on 14th St. NW in Washington, DC. As I stand in line marveling at the indecisiveness of the customers and the indolence of the employees, I reach into my pocket to produce $3 or $4 to hand over in exchange for my delicious latte. Alas—I’ve forgotten my wallet! As the veins in my temples begin to bulge with incipient rage, I remember that I have my iPhone with me. Huzzah! I open up the Mobile Card app and tap the “touch to pay” button—this is where the magic begins. The app generates a bar code that can be scanned by a special reader at the register. Voilà, I’ve paid for my coffee, and I have an automatic electronic record of the purchase. Simple, right? Let’s follow the money and see:
My Bank Account
Credit Card or PayPal Account
Starbucks Mobile Card Application
Cash Register at Starbucks
All these twists and turns have a palpable effect on consumer psychology, subtly loosening the purse strings of the coffee enthusiast. The application streamlines the process of paying for food and drink at Starbucks (without charging you additional fees), but it also obfuscates the actual amount of money you’re spending by means of all these intermediary steps. As you charge up your Starbucks Mobile Card with funds, you’re transforming an incredibly liquid asset—in this case, cash—into a different kind of “money” that only works at Starbucks.
If convenience is everything to you, this probably matters little; however, if you’re trying to budget your finances more carefully, you might consider sticking with cash payments. It’s much easier to tell what you’re parting with if you see Alexander Hamilton’s face on the bill you’re handing to the cashier, instead of casually flashing a computerized bar code.