Starbucks to allow for digital tips from iPhone

Coffee conglomerate Starbucks will push forward with its popular mobile payment program, which accounts for more than 11 percent of in-store transactions, by allowing customers in the US to add digital tips to their purchases.

The digital tipping feature will be included in the company's brand new Starbucks for iPhone application, arriving in Apple's App Store on March 19. A redesigned Android version with the tipping option is slated for release later this year.

The pending version of Starbucks for iPhone, though tailored for iOS 7, represents a modernized template for all of the company's digital services going forward, Starbucks Chief Digital Officer Adam Brotman told CNET.

The new application, available in the US, Canada, and UK on release, pushes essential information to the foreground in an overhauled dashboard and gives consumers a quick access to rewards, messages, and account history. It also sports a dramatically different look with a user interface and flow inspired by Starbucks partner Square, Brotman said.

Aesthetics aside, the app's most notable upgrade is the digital tipping feature. Customers will have a two-hour window following a transaction to add a tip of 50 cents, $1, or $2 to their bill. The digital receipt, also available inside the iPhone app, will be updated with the tip amount. Digital tipping via iPhone will be available for purchases made at any of 7,000 company-owned stores in the US. Starbucks plans to make digital tips available in other countries but did not share specific timing on its plans.

"We're really excited because tipping has been something our customers have been really asking for," Brotman said. "More and more customers ... carry cash with them less and less these days. It's nice to be able to leave a tip for your barista and your store using mobile payment now on the iPhone app."

Starbucks mobile pay, which lets people pay with a digital version of their Starbucks card on their smartphones, has been in the wild for more than 3 years. Brotman said that the company now processes 5 million mobile payment transactions per week across iPhone, Android, Passbook (on iPhone), and Square Wallet.

When inside the new application, customers can shake their phone from any screen to immediately pull up the barcode of their Starbucks Card and make a payment. The feature is appropriately named "Shake to Pay."

Earlier this year, a previous version of company's iPhone app came under fire for storing usernames and passwords in clear text. The vulnerability was fixed soon thereafter, and Brotman insists that the new iPhone app is secure. Starbucks does not store credit card or payment information on the phone, and the app has been reviewed by third parties for security, he said.