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Emerging Payments

Dunkin Adds Passbook Integration to iPhone App

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The Dunkin' Donuts iPhone app now integrates with Passbook, the software-based mobile wallet that stores payment cards and tickets from other mobile apps and typically relies on displayed bar codes for redemption.

The app's version 2.5 release on Feb. 14 also includes native support for the larger iPhone 5 screen and a feature that lets users recall and resend a digital gift card, "in the instance you mistype your recipient's address or phone number," according to the app's release notes on the iTunes Store.

The Dunkin' Donuts app first launched in August 2012 and was upgraded to include mobile offers and coupons in November. The Dunkin' iPhone app uses quick response (QR) codes to make transactions from a digital gift card. Consumers can also link a physical gift card to the app.

Image: Bloomberg News

Dunkin' Brands, the parent company of Dunkin' Donuts and Baskin Robbins, has been an aggressive participant in emerging payments technologies. In addition to its smartphone apps for the iOS and Android mobile operating systems, the Canton, Mass.-based company joined Merchant Customer Exchange in October 2012. The consortium of merchants is developing a cloud-based mobile wallet that will store card data and use bar codes to conduct transactions.

Speaking on a panel at the National Retail Federation's annual convention in January, Kate Jaspon, a Dunkin' vice president who serves as its controller and corporate treasurer, said consumers want to make payments with their phones and compared the experience to its customers' ritual of buying coffee every morning.

"We hope people will make paying with this wallet a ritual," Jaspon said about the MCX wallet.

Developing its own mobile apps and joining the likes of Wal-Mart, Lowe's, Gap and others in the MCX wallet are efforts aimed at controlling costs and consumer data.

"Our mentality has been that we could sit on the sidelines and see what happens or we could step up to the plate and meet the needs of our customers, franchisees and our own business needs," Jaspon said.

Jaspon wants other quick-service restaurants and merchants that typically have small-ticket transactions to join the MCX effort, which she said will result in a stronger mobile wallet for all merchants.

"It was really important for us to be at the table at the beginning so that the other retailers would understand the impact of this on small-ticket transactions," she said. "MCX is not about getting the best deal for the big guys…This is our best chance to sit at the same table as our peers and get our story told."

Dunkin's foray into mobile payments mirrors efforts by Starbucks, which developed a popular payment app for its own customers and in October added support for Passbook. Starbucks also aligned itself with Square by making a $25 million investment in the company in August 2012. The coffee giant began accepting the consumer-facing Square Wallet in November 2012. In January, Starbucks announced that it would begin selling Square's mobile card reader in its stores.

The Passbook wallet launched alongside the iPhone 5 handset and the iOS 6 operating system, much to the chagrin of those hoping that Apple's latest smartphone would include a Near Field Communication chip to enable contactless mobile payments. Instead, the wallet serves as a centralized folder that integrates with other apps, similar to the Newsstand and iBooks iOS reading apps. Soon after Passbook's launch, the wallet added limited payment capability by supporting Apple gift cards.

It's been speculated that Apple could further expand into payments by leveraging the data gathered on its iTunes Store or through a payment-capable "smart" wristwatch that's rumored to be in development.

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