Starbucks to increase number of cashless stores in Korea
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Starbucks Coffee Korea Co. said Monday it will increase the number of cashless stores to over 100 across South Korea this month amid rising use of credit cards and mobile payment systems in the tech-savvy country.
Earlier in April, the coffee giant began a test run of three cashless stores in major office districts in and around Seoul.
The proportion of cash transactions at these stores has since dropped from 3 percent to 0.2 percent, according to the joint venture between Starbucks Coffee International Inc. and South Korean retail giant Shinsegae.
The company will turn 100 more outlets into cashless stores from July 16 in addition to the three under the trial system.
Starbucks said the decision is part of its broader digital innovation drive as cash payment has been constantly declining at stores in South Korea, from 31 percent of the total in 2010 to 15 percent in 2013 and 7 percent last year.
“South Korea has a high utilization rate of credit cards and mobile payments. That coupled with the country’s well-established digital infrastructure enabled our latest expansion decision,” Starbucks Korea CEO Lee Seock-koo said in a statement.
The total daily average amount of electronic financial transactions came to a record 581.53 billion won (US$521.6 million) in the first quarter of this year, up 13.2 percent from a quarter earlier, according to government data.
Questions & Answers
Q.Why is Starbucks increasing the number of cashless stores in South Korea?
Why is Starbucks increasing the number of cashless stores in South Korea?
Starbucks is increasing cashless stores due to the rising use of credit cards and mobile payment systems in South Korea. Cash payments have consistently declined, falling from 31% in 2010 to 7% last year at its stores.
Q.When will the additional cashless stores be implemented by Starbucks in South Korea?
When will the additional cashless stores be implemented by Starbucks in South Korea?
Starbucks plans to convert 100 more outlets into cashless stores starting from July 16. This is in addition to the initial three stores that were part of a trial system.
Q.What was the result of the initial cashless store trial in South Korea?
What was the result of the initial cashless store trial in South Korea?
During the initial trial of three cashless stores, the proportion of cash transactions significantly dropped. It fell from 3 percent to just 0.2 percent at these locations.
Q.Is this decision part of a wider company strategy for Starbucks?
Is this decision part of a wider company strategy for Starbucks?
Yes, Starbucks stated this decision is part of its broader digital innovation drive. The company is responding to the country's high credit card and mobile payment utilisation, supported by its digital infrastructure.
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