Mere weeks after establishing a five-year expansion plan that will bring 5,000 new stores to China, Starbucks has taken another leap into largely uncharted territory: cryptocurrency.
The international coffee brand is partnering with bitcoin wallet iPayYou to provide users of its mobile application with a way to pay with the digital currency. The Bitcoin Direct to Starbucks feature enables users to transfer bitcoin from their existing iPayYou wallet to their Starbucks mobile app.
Starbucks’ decision may mark a major step in bridging the trust gap between retailers and bitcoin. Online retailers such as Newegg and Overstock are fully bitcoin compatible, while brands including Best Buy, Sears, Gap, The Home Depot and GameStop enable bitcoin users to buy their online gift cards with the currency.
If anything, Starbucks is showing that retailers don’t necessarily have to take the direct route when accepting bitcoin or any other cryptocurrency. With Bitcoin Direct to Starbucks, users select the amount of funds they wish to transfer, allowing the new feature to automatically withdraw the proper amount of bitcoin from their iPayYou account and deposit the correct dollar amount into the Starbucks account. Users will immediately see the corresponding amount in their Starbucks app and can make purchases at any Starbucks location.
By integrating a bitcoin wallet into a mobile ordering app, consumers are still technically paying with their own fiat currency once it transfers over, ensuring that a name and payment card information gets attached to each purchase. Retailers taking this step would be giving consumers yet another mobile payment option and more flexibility during the purchase process.
Bitcoin Integration Aligns With China Expansion
The partnership makes sense for Starbucks as it sets its sights on China. With China’s strict capital controls and taxes, and its currency the yuan dipping 7% in value in 2016, bitcoin has become a more popular option for Chinese consumers.
The bitcoin integration also comes at a time when the currency’s value reached its highest point since 2013, more than $1,100, then proceeded to fall off a cliff in the days after. On Jan. 5, bitcoin lost more than $3 billion in market value in just 40 minutes, illustrating the volatility and uncertainty surrounding the currency. Since a decentralized network of computers validates bitcoin transactions rather than a centralized bank, there is no authority presiding over the amount traded. Additionally, many users buy the currency for speculation with no plans to use it, instead selling it off later.