Why Starbucks is the WORST BANK In The World
“Starbucks is a bank” is a genius strategy where millions of Starbucks customers who are members of the rewards programme are essentially loaning the business around $1.6 billion at a 0% interest rate.
That's right, this substantial sum arises from outstanding gift card balances within its loyalty program. Interestingly, this amount exceeds a staggering 85% of the deposits held by conventional U.S. banks, which typically possess less than $1 billion in customer deposits.
However, here's the twist: Starbucks doesn't operate like your typical bank. They employ this substantial $1.6 billion as a zero percent interest rate loan. And the kicker? They pay it back in coffee, not actual money!
Every year, approximately $10 billion is loaded onto the Starbucks Card program, accounting for nearly half of the company's sales. Customers have embraced the convenience of app-based transactions, enjoying rewards and perks with each purchase. This approach encourages them to add funds to their accounts, allowing Starbucks to hold onto their customers' money without incurring costs.
And the plot thickens.
Unlike traditional banks, Starbucks is exempt from the regulations that oversee customer fund storage. No need for segregated banking systems, no investment in low-risk government bonds, and no requirement to manage capital and liquidity for safeguarding customer deposits. They are also free from strict KYC (Know Your Customer) and anti-money laundering rules. Furthermore, they don't need to report to the SEC (Securities and Exchange Commission). In essence, Starbucks can utilize these funds as they see fit, giving them a financial edge in advertising, marketing, and business expansion.
But that's not all.
Starbucks benefits from customers who fail to redeem their gift card balances. This translates to extra revenue for the coffee chain. For instance, in 2018, they gained a profit of $155 million from unused gift card balances. By 2022, this number had risen to $196 million.
In summary, Starbucks not only avoids paying interest on customer deposits but also manages to retain a significant portion of the deposited funds for their use. It's a double win for the coffee powerhouse.
However, there's a catch.
While this strategy benefits Starbucks, its customers miss out on earning interest and withdrawal options. There are no regulatory safety measures in place, and many customers even forget about their deposited money. For these individuals, Starbucks might just be the worst "bank" in the world.
Music:
Dream It - TrackTribe
-
12:57
ryanhoguepassiveincome
17 hours agoTOP 5 NICHES 🔥 Print on Demand Niche Research # 214 — (6/30/2024)
17.4K3 -
18:40
GeekyNerdyTechy
1 day agoGVM SD300B Pro Tutorial & Review - Powerful, Versatile, and Beautiful!
17.8K -
23:44
DepressedGinger
1 day ago $0.20 earned*FIRST* Donald Trump vs Gavin Newsom Election Prediction if Biden drops out
16.8K10 -
15:23
Freakin' Reviews
23 hours agoTesting Two Products From Walmart's As Seen on TV Aisle! Mr. Beast Lunch Box & Cool 360
12.6K7 -
36:34
TheTapeLibrary
1 day ago $0.09 earnedScary Stories Around The Campfire: 3 More Creepy Tales To Keep You Up At Night
8.11K8 -
0:55
Hannah Barron
21 hours agoFish Sticks!
19.6K25 -
36:34
Science & Futurism with Isaac Arthur
1 day ago $0.23 earnedFree Will, Quantum & Orchestrated Objective Reduction
15.7K9 -
15:49
Degenerate Jay
3 days ago $0.15 earnedThe Rejected Assassin's Creed Nintendo Game - Assassin's Creed Lost Legacy
12.6K4 -
11:11
America Uncovered
17 hours ago $0.36 earnedI Regret to Inform You the Debate Was Worse Than You Imagined
21.3K32 -
13:25
TimcastIRL
1 day agoCIA EXPOSED For Colluding With Biden Admin To COVER UP Hunter Biden Laptop
51.6K119