Efficient Payment Method Samples for Students †MyAssignmenthelp.com

Question: Discuss about the Identify the Most Efficient Payment Method. Answer: Introduction Starting a successful business is everyone's dream. It can be very hurting if a company fails to flourish due to reasons that do not include a barrier to entry causes, competitions, unfavorable legal regulations, minimal market share and even poor quality of products but due to the lack of efficient payment channel. This problem has been created by the fact that different individuals have a different preferred method of payment. The business will only attract the customers who are comfortable with their payment method. The other group of customers will shop at joints having their preferred method of payment. The problem is that the business venture cannot have a system that is compatible with all available payment methods because this is very expensive to install, upgrade and maintain. This report is written to identify the most efficient payment method that will ensure that Starbucks does not lose its customers due to inappropriate payment method. Defining issues The main issue in our case study is the mobile payment methods. Due to many people owning cell phones, Starbucks saw an opportunity for it to make payment for its products effectively. Starbucks did not realize that mobile payment could be faced with so many challenges than expected (Pastoll, Rochwerg, Vlaar, 2015). First, there is the issue of compatibility with its system. For example, there was Starbucks app that was only available on mobile devices that supported IOS. This meant that the application was not compatible with phones operating on android version and even windows operating system. Another issue arising in this case study is the issue of cost. The cost of installing the technology that can support the payment method is very high. Updating the systems and making them compatible is also very costly. The costs outweigh the benefits, and even if the payment method is most preferred by customers, it can be adopted as it will lead to losses at long last. Another issue in this case study is the problem of acceptance of the payment method. Some payment method receives a lot of resistance from the customers. This is due to reasons such as high service charges (Pastoll, Rochwerg, Vlaar, 2015). The payment methods such as mint chip and Credit card NFC charge a lot of service fee, and this discourages many customers and in the process the business losses customers leading to reduced customer loyalty and minimal repeat purchase which eventually leads to reduced market share that translates to lower revenues and profits. To find a mobile payment method that is acceptable is also a great challenge as this is almost impossible. The mobile payment method should be compatible with cell phones that are being offered in the market. In this case, the mobile payment method should be compatible with android phones, followed by IOS, then by blackberry and eventually by windows phones. Another issue in this case study is how to use the payment methods. The payment method can be the best, but if the employees of the Starbucks do not know how to use it, it will fail miserably. This issue leads to the point of training the users of the payment methods who include employees and customers of Starbucks. This process increases the operating costs as there will be training costs involved (Pastoll, Rochwerg, Vlaar, 2015). This issue will also result to slow operations as customers will have to get guided by the employees on how to make the payments. Also, the employees may not be well conversant with the involved technology, operations will not take place, and there will be low turnover leading to losses which may result in closure of the affected branches and joints. Decision maker identification In this case, Starbucks management will be the decision maker. This is because Starbucks business venture is the one being discussed in the given case study. The management of Starbucks is supposed to make a decision on the most efficient method of payment that will ensure that the business is successful in the United States and Canada (Pastoll, Rochwerg, Vlaar, 2015). The issue of payment method has a lot of impact on any business because that is how the company makes revenue to finance its obligations. This is very crucial because every business exists to make income and that is the reason it should have an efficient one that is accepted, has a low service fee, is very compatible with many mobile phones and has a low installation and upgrading costs. Efficient payment method will create a competitive advantage and position the business in a better position than its competitors, hence occupying a larger market share and maintaining customer loyalty. The management should employ the most preferred mobile payment method if they are to compete favorably with its competitors and in this case, it is Tim Hortons which is a direct competitor. It has been identified that the rapid market development of Starbucks have been achieved after Howard Schultz had purchased and expanded the business (Pastoll, Rochwerg, Vlaar, 2015). Starbucks have joint hand with Square for enabling mobile payment option for its customer. From the case study, it has been identified that Howard Schultz is the decision maker in the Starbuck Company (Pastoll, Rochwerg, Vlaar, 2015). Howard Schultz have made the deal of investing $25 million dollar for incorporating the mobile payment option with collaboration with Square through Square Wallet Application. Analyzing case data The causes for Starbucks facing a lot of challenges in selecting the most efficient mobile payment method can be attributed to; First of all, Starbucks does not choose the mobile phones which are being used by the majority of the customers. In this case, Starbucks used cell phones operating on IOS that is not most used by customers. This had an effect of the Starbucks app failing, and this is wastage of resources that could have been used elsewhere effectively. Another cause of the failure of the mobile payment methods is that customers and employees of Starbucks are not conversant with the technology employed. The effects of this problem are that the business will not be in a position to operate efficiently as customers do not know how to make the payments and they will have to be assisted by managers.This slows down the operations and can even lead to closure of the involved branches. Another cause of the problems associated with payments methods employed by Starbucks is the use of payment methods that are not compatible with the systems of the firm. This results to incurring upgrading and updating costs that lower the profits of the business (Pastoll, Rochwerg, Vlaar, 2015). Employing a payment method that is not compatible with the systems of the business results to wastage of resources of the company. There various opportunities available to Starbucks that should be utilized for efficient mobile payment method. Many people in the United States and Canada have access to cell phones, and this provides a concrete base for establishing effective mobile payment method. Many citizens in Canada are educated according to recent statistics. This enables them to be able to use cell phones, and this will allow Starbucks to be sure that mobile payments can be successful in Canada. The constraints, in this case, will be high service fees. The high service fees will discourage customers as they will fear to incur these high costs. This constraint is hard to be avoided because secure mobile payments methods charge high fees. This increases the costs of purchases and will be avoided by customers at all costs. Another constraint is the interdependency of the stakeholders of the mobile payment method. The involved stakeholders should play their roles effectively if the method is a success. If one stakeholder e.g. bank fails to play the desired role the payment method will fail. It is also difficult to coordinate the involved stakeholders. Generate alternatives Due to the failure of the already employed mobile payment methods by Starbucks, there is need to seek for alternatives. The first option to the mobile payment method will be cash. Cash has been one of the oldest methods of paying for goods and services received. Cash payment involves paying for the coffee using a physical currency which could be informed of coins or notes. Another alternative solution that has been identified for Starbucks is the application of minitchip, Bluetooth solutions, credit card and NFC (Pastoll, Rochwerg, Vlaar, 2015). Select decision criteria There are various criteria to be used in selecting the best decision. Some are qualitative, and others are quantitative. The quantitative ones include; cost. The cost of installing and upgrading the payment system should be affordable. The service charges involved should also be minimal and reasonable if the payment method is to be successful. High transaction costs scare customers and potential customers as they increase the cost of purchasing. The payment method that will attract the largest market share should be selected. Mincomearket share translates to a high turnover that leads to improved revenue(Pastoll, Rochwerg, Vlaar, 2015). Market share also shows that the business is operating effectively and efficiently and that it attracts many customers due to its improved method of making payments. The productivity of the business due to employing a certain method of payment will also get considered. The payment method that leads to improved productivity regarding operations of the company should be selected. Productivity can be measured by factors such number of customers served per day and also assets of the business generating the needed revenue. Smooth operations improve productivity (Pastoll, Rochwerg, Vlaar, 2015). Profit is also another quantitative measure that cannot be left out in evaluating the most efficient payment method to be adopted. The selected method should be the one that results in the highest profit because this is one of the primary reasons why the business exists. To achieve this, the method should be the one reducing all the costs associated with transactions. The qualitative measures to be used to determine the most efficient payment will include competition. The selected payment method should be able to create competitive advantage. This should position the business in a position that is better than all the competitors. The method should enable the company to compete favorably. Another criterion is customer satisfaction. The payment plan should ensure that all the customers are satisfied and this can only be achieved through having a simple, convenient and easy to use the method of making payments (Pastoll, Rochwerg, Vlaar, 2015). The selected method of payment should also ensure that it maintains a good image that can help to attract more customers for the benefit of the business. The payment method should not damage the reputation and goodwill of the firm. Analyze and evaluate alternatives To effectively explain the options, there is need to assess the advantages and disadvantages of each option. The first option is the use of cash payment. The associated advantages are that there are no transaction fees involved, minimizes bookkeeping which reduces stress and also that it can also get used by illiterates. The disadvantages are that it increases the risk of theft by criminals and employees, and also they require secure safe to be made and this wastes resources of the business. Select preferred alternative Based on the various alterative solutions identified for the mobile payment in Starbucks, the application of Custom Solution Using Bluetooth Low Energy Beacons has been identified as most preferable for implementation and use for purchase. In the preferred alternative solution, beacons are used for detecting any smartphones within a particular range. BLE (Bluetooth Low Cost Beacon System) can be used for detecting the behaviors and purchase pattern of the customer and complete the payment methods through the smartphone (Pastoll, Rochwerg, Vlaar, 2015). It has been identified that, due to the security measures involved in the purchase and payment, the customer needs to initially opt in for the system during the first visit. BLE also offers promotional message and personalized meal picture while analyzing the purchasing behavior of the customer. In order to store credit card data and payment options, Starbucks needed to collaborate with third party store app or mobile wallet for compl eting the payment process (Pastoll, Rochwerg, Vlaar, 2015). The functionality and technology of BLE was solely being supported by largest payment application giant, PayPal. Whereas, Square Wallet that has been already implemented in Starbucks was prepared to roll out similar featured for supporting the BLE in the near future. For Starbucks to implement BLE technology for their payment system, all the Starbucks terminal required reconfiguration for supporting the mobile wallet and BLE beacons. In order to redesign and integrate all the Starbuck location based on BLE technology, Starbuck Management have employed in-house development team for updating the existing software (Pastoll, Rochwerg, Vlaar, 2015). Further, integration of hands-free payment for mobile application used for Starbucks. Develop action plan Starbucks can implemented the identified solution based on the following action plan that has been developed in the section below: Tasks Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Evaluating the existing issues in the payment system used by Starbucks Identifying the needs of Starbucks Review the existing Solutions application for payment Select an appropriate technology for integrating mobile payment option Identify the technological requirement that needs to be implement for BLE Update the POS software for making BLE compatible Integrate hand free functionality for payment Implement the BLE system at every location provide training of baristas for using the BLE application start Starbucks operations Conclusion From the case study, the mobile payment methods provided could not help to solve payment problems facing Starbucks effectively. It was, therefore, wise to seek other alternatives which it has never tried which can assist the business flourish. The needed payment method should be secure and easy to use so as not to inconvenience its customers. The transaction fees should be very low so as to attract many customers. From the analysis, identified for including the payment methods in the Starbucks location, Custom Solution Using Bluetooth Low Energy Beacons has been identified as the appropriate solution. Custom Solution Using Bluetooth Low Energy Beacons allowed in developing customized and mobile payment options using Bluetooth technology. References Pastoll, C., Rochwerg, T., Vlaar, B. (2015). Starbucks Canada: The Mobile Payment Decision.