Starbucks is Secretly a Massive Bank

[@DeLorean4]

I got a Starbucks gift card in Canada and one day traveled to the US and thought I'd try my luck with my gift card there. It worked! Turns out Starbucks is also a bit of a currency exchange as well.

[@internet_userr]

How much currency did you get? The CAD converted to USD?

[@MoneySoul]

Umm it’s all Starbucks money love lol

[@WarriorsPhoto]

I was going to make this comment as well. I was able to accomplish the same when traveling from the USA to Canada. Interesting find isn't it?

[@Mario-bj4gu]

can't that just be because you're buying starbucks funds and not actual money?

[@sfdko3291]

You mean...a bank?

[@TheManOfTheHourEveryHour]

So interesting you made this, I recently started using the Starbucks app and got the ick from the needless step of preloading whole dollar amounts to a digital card/currency, instead of just paying my tab in the app from my bank card, directly. Now I know why. And those whole dollar amounts make it almost impossible to completely delete the digital currency from the app. This is as bad as when they tried rounding people's change up/down to get rid of pennies 😂

[@owens375]

Can’t you just use your cents or whatever remaining and then pay the rest with credit/debit?

[@GoldenAura32]

Some companies that do this allow you to scan your rewards card to drain it then pay with another method at the register, starbucks is not one of these companies.

[@owens375]

@@GoldenAura32 wow thats crazy

[@VirgosGroove3]

@@owens375you can if you go into the store. I’ve done that to clear my Starbucks cards before

[@SLPPYTP]

@@GoldenAura32that’s not true. You can ask the cashier to charge you the amount left on your sbux card and then the rest cash or whatever. I used to work there, the cashier who told you no was either lazy or stupid

[@tace21491]

Another reason to support local coffee shops.

[@HaroldKuilman]

Especially the Dutch ones 👌🏻

[@numblinkart]

Support Dez nutz

[@Virtueman1]

Lower taxes and fewer regulations help local coffee shops. Support libertarianism.

[@sebastianprimomija8375]

​@@numblinkartgott'im

[@Nathan_Coley]

100%

[@tarqu1no39]

What's even more sneaky is the way they somehow managed to make people believe they're drinking actual coffee.

[@Travis2L]

THEY ARE

[@4thzone697]

Coffee snobs are cringe

[@johnnyonthespot4375]

Hang on .... That swill is considered COFFEE ?!!?

[@jonarc2403]

It is coffee. I work at starbucks as a barista. The cold, refrigerated, glass bottles are probably less so, but we use coffee beans in any made-to-order drinks. We even grind the drip coffee ourselves. The espresso is machine-ground. Edit: phrasing

[@GreedoGangrene]

@@4thzone697 almost as bad as wine snobs

[@Baaddu]

Thank you. I pretty much assumed Starbucks and other prepaid cards used unspent balances to earn money. But beware of tying a debit/credit card to a prepaid card. A few years ago McDonalds Canada had an issue when hackers got access to their rewards card and from what I read at the time McDonalds Canada's attitude to customer's complaints was " SUCKS TO BE YOU! take it up with your bank" some customers lost thousands

[@israelisjeshuas7009]

Good point. Well said. 👍

[@TacoTuesday4]

Don't ever do a debit card. All of the customers that "lost thousands" didn't lose anything if it was a credit card because that could be reported as an unauthorized charge and wouldn't have resulted in any customers losing money.

[@Lawna-ig4xz]

Tricky.

[@ValCronin]

When you say 'tying a debit card to a prepaid card', what does that mean? Does that mean saving your card info on the app to easily load funds to the (prepaid card) account?

[@Crawlerbasher]

I tried the Starbucks loyalty card when it first came out, and was shocked I had to load it up first before I can use it. Was not happy with that at all, I wanted to earn rewards every time I come in and buy a coffee. Since I don't normally go to Starbuck I felt like this was a rip off. I've got loyalty card for Caffe nero and Costa Coffee and I do not need to preload that card, I just scan the QR code, pay and get my stamp. And thats how it should be done.

[@sabrinakingsley798]

Sure but the channel is misrepresenting what Starbucks is doing. It's just a gift card. He is starting conspiracies.

[@bakchormeeman7864]

Tell u what.. start your own company and then see which method you’d choose to go with.. the one that’s giving u perpetual free profits or the one where u don’t

[@Tazza81]

@@sabrinakingsley798 you don't have a clue. Star Rewards is not a gift card.

[@Grushdeva48]

Star rewards is not a gift card, the gift card that you buy to join Star rewards, is.

[@VirgosGroove3]

That upset me too. Luckily they changed it.

[@nicksonyap]

I'd consider this as vertical integration, just like how Starbucks can have their own warehouses & eventually own coffee bean farms (upstream), they can also vertically integrate downstream to the financial institutions and of course, being subtle about it.

[@robinyilmaz1155]

Interesting perspective! I like it

[@glichjthebicycle384]

Exactly this. I was suprised he didn't mention this in the video. I was expecting the word "integration" to fall at any moment lol.

[@VivekYadav-ds8oz]

They're definitely allowed to do so, but just like they would still need to abide by the "farm laws" (whatever they are) for their coffee bean farms, they should still be treated as a bank.

[@siulanainad]

You are very clever. However, I suggest you Study Sears Roebuck. The poster child of vertical integration. They are no longer in existence ( what is left is a shadow of the colossus it once was). What killed them? Vertical integration. They had no one to squeeze for better terms. They owned everything they sold.

[@nicksonyap]

@@siulanainad wow, that's an interesting input!

[@imaginaryguide1895]

Thank you for spotlighting Starbucks' business practices in this episode! I was aware of their labor violations, but not of their Starbucks rewards investments.

[@artsmith103]

What labor violations, hiring too many tatted liberals?

[@LuisSierra42]

People should stop consuming their products

[@Steven-xf8mz]

it's not a bank. As long as their investment is reported and accounted for in their tax filing, it's not a banking institution. I would say if their reward program which is tied to their GC program is an investment vehicle, then your free drinks and extra stars earned during promotional period would be considered interest payment. Under such circumstances, you will need to get a 1099-INT from Starbucks each year for your tax filing. Remember it is up to the recipient to verify their own # at end of the day. You would need to properly assess how many free drinks and stars you received from Starbucks each year. GL

[@jeremyl9515]

I think it's totally fine, it's the reward program that provide incentive to customers with great service. One shouldn't be punished for their reward program just because they have millions of customers that want to be in the program. Any business would & should do the same, economically, to allocating funds for the great benefit of all business, not just Starbucks. Those that are questioning simply because they don't have a stake in that particular company. It's mostly jealousy and envy, not for moral justice or virtue. And anyone is crying about it, deep down you know which categories of people you fall under. Yuck! Quit pretending.

[@BoardsportsGroup]

They're not the only company doing this...Subway, any one of them with a preloaded card.

[@Alpha-ro8sc]

Thank you for this video. How about one on insurance companies? I had a friend who was an agent. Company policy was to deny every initial claim. Larger claims, no matter how legitimate, would be denied multiple times. They calculate each claim as a loss & invest customer premiums for profit.

[@wilmabrock6401]

At the very least, I now grasp the concept of leverage. Creating

[@GeorgiaMoore.]

Most people simply enter the foreign exchange market without comprehending matters like this. The first stage in building money is determining your goals and risk tolerance, which you may do on your own or with the assistance of a financial counselor who works with a verified Finance agency. And also you can learn the facts about saving and investing and create a clear plan, you should be able to acquire financial security over time and enjoy the benefits of income management

[@artsmith103]

Very similar to the frequent flyer points business. I saw a video somewhere about how massive and competitive that is. I think there was a bankrupt airline whose point system was still worth a small fortune.

[@username65585]

Probably Wendover Productions “How Airlines Quietly Became Banks” for other people looking.

[@GoldenAura32]

I believe it was American Airlines whose reward points were worth more then the actual company because the par value for 1 mile was 1 cent.

[@NikhilAutar]

Poker Stars did something like this back in the day, but when they had liquidity issues and a lot of people tried to withdraw (almost like a poker bank run), it all collapsed. I don't think this will happen to Starbucks though. Unless someone held them to ransom... like... their employees who are NOT happy LOL

[@TomMarvan]

I think Nordstrom has had a VISA card for at least 15 years ago where you could earn points and priority to shop sales if you have a card. They do not have cash deposits as Starbucks has, but the ability to pre-purchase items during the Anniversary Sale before it even starts does certainly encourage spending, putting it on your card, and of course potentially paying interest and fees on the card, which I presume Nordstrom gets a cut off as part of a partnership with a bank. GoDaddy, the domain name registrar, e-commerce and web hosting company have now started offering merchant services to compete with the likes of Square and PayPal. A clever idea, as they can bundle it with their hosting. And of course, airlines long ago have been offering miles with cards, sort of side hustle that is vital to companies whose apparent core business is shaky, based on the repeated hand outs they require from the government. Great video! Congrats on the ABC deal!

[@NinaRossBusiness]

No surprise. McDonald's is secretly a real estate company

[@shelbynamels7948]

True. General Motors is a health care company, Harvard is a private equity company.

[@ogjk]

I am aware they are doing this, Polymatter did a good video on this a while back. I allways try to leverage special deals and promos they have ecpecially when traveling otherwise I only go to Starbucks once or twice a month and just make my favorite drinks at home.

[@lawrencefrost9063]

Yeah Polymatter is always doing videos of shit I had no idea was happening. Coldfusion copied his homework.

[@Ellivation]

Sure is where I found out about this lol

[@JimJones-kj8jk]

I knew I've heard this argument before!

[@garygagnon5057]

I have never had, or been inside a Starbucks, nor will I ever.

[@danielhale1]

The main thing that concerns me with this sort of scheme is risk. The customer thinks they're putting some coffee money away in a safe place for convenience. In fact the bank is investing it. Sure it's a safe, low rate of return, but sometimes safe investments go down too in a financial downturn. And over time, Starbucks may start to get more risky as the profit potential calls to them. Eventually we may see a day where people want their SB money to buy coffee etc and SB says "it's gone!". If that happens when the company also is facing a downturn of its own, that gets ugly.

[@arsenarzumanyan2651]

but its not like they ever tell you , you can get your points back as cash.... what they really owe you is coffee..... so i dont really see the risk here, the only risk really is that starbucks goes bankrupt and ceases to exist, in which case the points loose all value. I dont see any other risk in this at all, if Starbucks takes my money and gambles it all away.... idc, im just owed a coffee

[@skaarraven]

A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. How do i get a loan from starbucks?

[@anonymouse740]

Fun fact about UK supermarkets (probably elsewhere too), they make a lot of money from their credit cards. That's why you always see them advertised everywhere. They are very cash rich at any one time and they make a lot of money by lending out that money. In fact this is why their suppliers are often pissed off because these big chains take so long to pay them because they want to hold onto that money for as long as possible.

[@Skoozi]

In store credit cards are at least beholden to the rules and regulations surrounding credit cards, this program at Starbucks is likely free to change the terms and conditions at will. It's apples and oranges.

[@anonymouse740]

@@Skoozi Yea and people voluntarily give them the money. Suppliers who are waiting months for payment are not really signing up to their money being lent out but have no choice.

[@jenniferbeemer]

In the US at least most states (probably all) have unclaimed funds statutes. What than means is that is a customer places a deposit for the potential future purchase of product but fails to use it, the company that receives the deposit has an obligation to return the funds to that customer. The company must make a reasonable effort to return the funds and if they fail to do so after a set period of time the unclaimed funds must be sent to the state. The company may not retain these funds. These laws are referred to as escheat statutes. Every company operating these types of programs probably has a team of accountants that deal with these issues either internally or externally.

[@shelbynamels7948]

ONly applies to accounts with an identifiable owner. Gift cards are essentially bearer accounts, meaning you don['t have to identify yourself as the owner. All you have to do is have a card and present it at the payment terminal.

[@rampage241]

Great job doing the collabo with ABC!!!

[@robinholmes785]

What you didn’t mention is if there is an approximate value of Starbucks Stars? This reward to the customer is where regulators could step in in the same way gambling machines have to give a fixed percentage long term??

[@LK-dz6pb]

Yeah, a truly pretty ingenious scheme, as Starbucks is also, obviously, much more resistant to any form of a "bankrun" and doesn't offer a cash refund on giftcards. Thus, even if the company goes on the verge of bankruptcy and everyone grabs their forgotten gift cards and rushes to the stores to grab smth while it's still going - well, in this worst-case scenario, people will simply participate in merchandise/perishable produce liquidation (which is only helpful), and won't be able to ask for a single penny of actual cash. I'm surprised you didn't touch on the aspect that this "loan" from customers is not only interest-free, it's effectively "tax free." For each full $1 that Sbux receives from a customer (and turn into 0.05% profits), they will subsequently only have to give away ~97c worth of actual goods, as the rest will be sales taxes, taken out of the customer's balance, not the Sbux' pockets! Geez, that's a free license to print money, if you think about it.

[@ronburgandy1475]

Thank you for doing these videos! Like GE becoming a lender and insurance company, and McDonald's becoming a landlord not restaurant chain.... Starbucks and SOOO many big companies twist their core business in the name of "profit"

[@Septimus_ii]

This is MUCH less compelling than McDonalds becoming a landlord. The amount of interest income that Starbucks earns from this scheme is pretty small and probably not even the main reason they run it. I think it's more important that they reduce transaction fees, that they pocket funds which are never spent, and that they lock customers in to spending at Starbucks.

[@shelbynamels7948]

@@Septimus_ii The figure I saw being bandied about of how much money is stored on SB cards and apps is 5 billion dollars. I wouldn't call that pretty significant. That could earn them significant interest on the float, it could be used as collateral, and, finally and most significantly, it's money that never has to be paid back because it can only be spent on product.

[@teehasheestower]

It seems more and more that the meta business goal is to move from a traditional business model like products or services to any form of unregulated banking as soon as possible. You see this with car dealerships, airlines, and now coffee.

[@JasbirSingh-zj1fg]

Yup. Watch "how airlines quietly became banks".

[@revvend]

I haven't been to a Starbucks since 2016. I don't know how it is in other countries or how it is now even here in Ireland, but back then they did not have organic coffee only the regular one which is drenched in pesticide and herbicide etc, coffee beans are always on the list of dirty dozen, and they didn't use filtered water only regular tap water which is full of chlorine, fluoride and other really dodgy chemicals. So they didn't even have coffee, it was more of a weird concoction of nasty chemicals which you can sip through a plastic lid. 🤢🤮🤮🤮 7 years have gone by and I'm not missing a thing. 🤷‍♂

[@mirnivoznik8536]

Greetings from SLOVENIA - the shot of the island on the lake is magnificent. Cheers!

[@decus9544]

I really don't see the issue with this. Customer's get free stuff and Starbucks makes more profit. Basically the definition of a win-win.

[@raghu7174]

Exactly. Pretty smart and obvious way to make more profit for Starbucks

[@YaYousef5]

The issue is the lack of transparency for the customer. When you go to upload money onto your card/account, it doesn’t conspicuously state they’re going to take that money and use it to invest to make profit off of it.

[@raghu7174]

@@YaYousef5 Banks do the same thing. But we don't seem to care about that do we? Consumers need to be wise where they park their money.

[@YaYousef5]

@@raghu7174 one of them is a bank. The other is a franchise where you can get 4 days off sugar and caffeine in a single drink. That’s the difference. There needs to be transparency.

[@decus9544]

@@YaYousef5 Why does there need to be transparency? If there was risk of customers losing their money then I'd agree, but if the investments are risk free or otherwise 100% covered by Starbucks, then it doesn't affect customers at all.

[@IncomeBoost42]

As I understand, you cannot withdraw the funds once deposited in the Starbucks wallet. So that’s worse than banks and gives them a ‘guarantee’ that the money is theirs. Therefore, unlike banks they don’t need to keep a reserve in case people withdraw money nor face the risk of a bank run. People should be allowed to withdraw their money because they technically have not delivered the goods at the point of making deposits. I hope the regulators implement this and not just require them to get a license.

[@arsenarzumanyan2651]

but this is just part of the arrangement, its not really a bank as we think of it, becouse no one is using starbucks points as a way of saving there money and retirement.... thats why banks have strict regulations. The only bad thing that can happen to you, is if Starbucks goes out of business , and your points are useless. But if this scheme helps them be even more profitable, i dont really see how this would increasing the risk of anything.

[@StalkedByLosers]

As long as their investment losses don't hurt the customer balance, I say it's smart money for Starbucks and the risk needs to be 100% on them.

[@philthornton1382]

The risk is on them, unless they went bankrupt, then like any gift card balance you’ve lost it

[@StalkedByLosers]

@philthornton1382 well gift cards are exempt from bankruptcy, they need to ask for court permission for that. If that's the case, I support Starbucks investing our unused gift card money as long as it doesn't interrupt our use of it. I think it's a great idea for them, good for them.

[@Skoozi]

@@StalkedByLosers With Starbucks program it's not a gift card, that's the whole issue. It's like buying in game currency on a mobile game, sure those could be used to buy things in game but the program can be shut down or modified at the will of the company because it's not protected by the same rules surrounding gift cards.

[@philthornton1382]

@@StalkedByLosers gift cards are an unsecured creditor and pretty much last in the queue in the majority of the world

[@StalkedByLosers]

@@Skoozi ahh. I need to look into that. Not sure how that is.

[@vincentdermience1137]

I wouldn't say this is illegal as these large companies generate profit from all the goodwill they created over time. And indeed, as you say, it's purely voluntarily that customers give Starbucks (and the others with their prepaid cards for spending later) free money. What I'm curious about though is whether this scheme could snow-ball and somehow require government intervention at larger scale, using citizen's money to cover-up the hypothetical screwups of these corporations. Other than that I'm fine with the scheme.

[@yrosan]

If you're a regular customer, let's say 50 bucks a month, I don't see the harm. Over a year, they make 30 cents out of the money you put in there, and that's if you don't use it. Let's be real, there's no way the rewards have a market value of less than 30 cents, so I feel it's a win win situation.

[@bryanbrian1234]

I've often wondered about the massage gift certificates that don't get used or some fly by night operation going out of business, seems like easy money.

[@smileyeagle1021]

Aside from being integrated with their loyalty system, I'm not sure how this is different than any other prepaid program. You could make the same argument that any transit agency that uses those tap to pay cards (like the Clipper card in San Francisco, the OMNY card in New York, or the Oyster in London) that you can load up with cash at kiosks or by credit or debit card online are doing the same thing. What exactly is it that Starbucks is doing that has made it that unique?

[@PM-st6vu]

Geo agnostic solution plays a big role in consumer psychology. Imagine having a safe strategy of using these cards than inserting cards in different POS system. The safety mechanism should be worth to vouch for.

[@LuisCipher]

In general, from a liability aspect, the companies are required by law to reveal any associated risk with using their services as pertaining to the customer's deposits. However, if the deposits are strictly for future goods and services then the companies have no obligation to inform customers how these monies are used as long as the company still provides the dollar amount value of goods and services. - But that's just my inference based on my limited knowledge and experiences.

[@ggreddy3568]

Many companies do the same thing in my opinion, not alone Starbucks. The gift card purchased means the co receives money before you actually spend. So the money is free money they invest some where . As long as customers are not cheated and they get the rewards I think it is ok.

[@miketyson8236]

It seems more like a pre-sell. Like when you buy a ticket for a concert you pay weeks or months in advance and you use the service only later.

[@nikhilmulay]

The South Australian public transport is similar. I'm not sure about other states but you have to get a card and pre charge it with whatever amount you need for the future. And while Starbucks atleast allows you to pay cash as well, the SA public transport does not. That is the only way to pay! And it is run by a private company currently.

[@DM01710]

Went to Nero's the other day my friend had a pre-paid card very similar to this system. Amazing

[@-www.chapters.video-]

00:00 Introduction 00:32 Starbucks Rewards System 01:30 Starbucks' Banking Operations 03:45 Gray Area of the Rewards System 04:43 Other Companies in the Financial Sector 06:03 Government Regulations 06:38 Conclusion

[@ulrichleukam1068]

This is an 8min video! If you do not have time to watch it now then later ...TikTok and other short form videos is shortening people attention span: always QUANTITY over QUALITY

[@-www.chapters.video-]

What's your point? Tiktok maximum length is 10 minutes

[@brianmclean7576]

Medium Ice Coffee at Starbucks is $5 / large ice coffee at McDonalds $2.50 - Literally wake up America !!!

[@retr0robbin]

Congrats on the ABC collaboration! I'm looking forward to watching it

[@JohnnyRico777]

It's an older video re-released right ? I know I've heard that subject before..

[@zaptor1514]

This is not ok at all as Star is not playing by the same financial rules and regulations as the other financial institutions are. Lots of cards are lost and never redeemed resulting in a windfall of free money. No interest is paid on the funds held in the cards. The freebees have expiry times so many are not redeemed. Which brings to mind Walmart asking for charity donations at the cash register. They don’t provide tax slips to claim on income tax filing. Walmart collects all this money for charities, receives all the credit and goodwill, plus receives tax credits to reduce their taxable income. They financially score off the backs of the donators. Unbelievable!

[@erfquake1]

This is interesting. I'd also heard that airlines are actually banks as well.

[@crookedtimber6227]

Well done on the ABC collab! Top notch Aussie broadcasters teaming up!

[@Ynhockey]

In Israel it's illegal for a company to be a regular business and also a financial body, including different companies with the same owners. I'm not sure if Starbucks would qualify as a financial body in Israel, seeing as how it does not give out loans. However, the company failed in its main product in the country already, because their coffee had been considered sub-par, even compared to the cheapest coffee chains. Their local franchise folded.

[@SSJSonic13]

I'd venture a guess it won't be until some consumer abuse occurs that regulations will crack down on the program. A lot of regulations with banks were put into place AFTER a crisis hit, not before, with the argument being, "Why stop, what's the downside?" as it snowballs.

[@abdulhaleemmabisi4292]

Arent banks doing the same with fractional reserve banking models?

[@ashishjoseph9051]

Just one question, if a customer deposited 25 boller and out of which customer used 10 dollars and now due to some emergency customer wants rest amount back in their account,so will they get rest money back or no option accept using rest balance with star bucks only . Please answer

[@antonio20123]

Uber does the same thing, here in the Dominican Republic. I think you put like the equivalent of $10USD and get a 10% of on your trips using that stored balance, I forgot the name they give to this scheme.

[@NothingHereNothingThere]

I used to go to my local coffee bar that did their own sourced beans and I do know what high end coffee tastes like and personally partial to the Purple Caturra and Pink Bourbon varieties of Columbia but in the end, the prices are just not for regular drinking. Also I've done my own timed brews and found out how exacting it has to be or the taste changes but it just gets tiresome. So mindlessly I go to Sam's Club and buy my Cold Brew bottles, 2 bottles last me a month for $15. A 12 oz bag of Pink Bourbon beans can easily cost nearly $30 and gone in a couple of weeks and a pain in the butt to brew just right.

[@Smokedship]

But this is prevalent in almost every chain restaurant / cafe / dealership out there. A reward its problem with a subscription based model is pretty common.

[@kalpitkd]

This is geography specific. Lack of regulations in North America for PPI or pre paid payment instruments like wallets makes it possible. In countries like India, you are not allowed to do that.

[@N0N0111]

Any card with credit is a loophole, all the big brands know this. Even the government uses these loopholes to financially uplift a certain service. Parking credit on a card is basically lending your money to an institution, they pretty well know what to do with that.

[@thegorn]

Interesting. eBay used to do this, but then changed and flushed your money back to your bank. Maybe they were forced to.

[@kakandelawrence7473]

Since the subscription funds are mostly non-refundable it's clear that the depositor already made a purchase and just waiting for when it will be delivered on his commands. So companies can view this as already implied sales and it's fine for then to start enjoying on the money as early as possible

[@selmanyassin]

i dont understand how its customer funds when the customer has willingly exchanged it for a virtual currency. its like condemning epic games for whatever they do with funds gained from the ingame sale of vbucks.

[@user-ho4tb5qe7v]

My high school had something similar for buying food in the cafeteria

[@jgg204]

"Starbucks is Secretly a Massive Bank". I was at a Starbucks last week and can confirm, I waited in line at the drive-thru for almost 15 minutes.

[@damilolaodusola]

If customer are still allowed to take/withdraw their money for the service, without having to wait 3 - 5 business days, I think it's fine. However, a certain percentage ofthe profits of the of the funds should be given back as dividends.

[@klemenfpv]

7:35 Bled in Slovenia 👍 .. no Starbucks in our country 😉

[@hermdude]

This practice has long been done especially in the public transportation and telecommunications sector where you top up your cash to your card first and use their amenities later (prepaid cards). I suppose the difference here is that those sectors have huge fixed costs of which upfront payment by consumers could be justified, while companies like Starbucks don't need this leverage to stave off costs.

[@teghnet]

Banking is just the infrastructure for value exchange. We would all benefit from having a decentralized system of independent actors, or better yet self custody of value.

[@horaciokanashiro-hv2zn]

A perspective: It has a similarity with the situation when a guy uses a -empty- parking space of a shop/store and not even enters the shop. In most places this action is forbidden/regulated. Finaly: I ♥️ ☕, it seems that caffeine intake doesn't make us wiser/wake up.

[@REVIEWSONTHERUN]

Very interesting! Thanks for sharing it. ✌️

[@ccbrazelton1349]

There’s no grey area, Starbucks is genius. They have no obligation to be any more transparent than the law requires them to be. The idea that any company should be required to have some sort of social obligation is so crazy. Businesses are created to provide some sort of service or value to society. It’s up to the consumer to “take it or leave it.” Companies that add value grow, those that don’t close. It’s the invisible hand that drives the market. Starbucks is doing nothing wrong. With the information now presented and known, the consumer can make the decision to pre-load an account, or just pay as you go and the overall market will decide if it’s a good idea or not.

[@ajackson9326]

Great broadcast

[@doylefamily505]

Same applies with toll roads... You top up .....they use your money....

[@GapedCeiling]

Also did you know the app wont let you digitally tip the barista's unless you pay using money you loaded onto the app? So if you pay using a credit card you have saved on file, it wont give you the option to include a tip after the sale.

[@pazzariatv]

I’m a Starbucks rewards member, since it’s inception. Here are my thoughts: There is absolutely nothing wrong with any corporation attempting to make a profit on money that is, essentially, alternative theirs. As long as the rewards program makes good on their free products, it’s totally fine. Why can’t Starbucks use the money it makes to subsidize the free products? If you want your money back, just ask at a Starbucks. In terms of this nonsense of trying to “protect the consumer”, it’s bull. If you aren’t allocating those funds for your Starbucks products, then don’t load up your card. Have some control over yourself.

[@ozairakhtarcom]

I guess, this is something which is kind of useful for learning for a lot of people.

[@jacobhaust]

Banks are "regulated" and look at how many mistakes they make, often. I think "regulating/licensing" that process is only going to cut third parties into the operations for profit instead of what regulations are suppose to do.

[@judymcfarlen1665]

thank you for your eye opening content

[@Drew_TheRoadLessTraveled]

I think this is how Armorgard started in the 60's with payroll. Collect payroll on Tuesday invest sort term investment, pay workers on Thursday. Classic Short invest.

[@LuxxeExotic]

Well done on your collab with Aunty, pretty huge moment for you I bet 👏

[@Scoopta]

As a starbucks rewards user I saw the title of this video and immediately had a suspicion I knew what they were doing...and I was right. That's genuinely pretty genius...makes me want some of that ROI but not gonna happen lol.

[@ryanpeters3289]

Apple and Amazon are also becoming Financial Services companies

[@krozareq]

My main issue is it pushes people to install and use apps for everything. You call them convenient, but they aren't. People use them for the rewards and specials. Overall, the freebies obtained with apps are just baked into the overall price of the products. There's no net gain to the consumer. It's just another way for companies to get their closed source, proprietary, and likely invasive, apps on your devices.

[@MehdyDesertFox]

I never had any fidelity card and always pay CASH in physical stores. Paying cash is freedom and privacy and data protection.

[@brian_castro]

This type of financial product is not new. This really started with airlines when they created their miles rewards programs in the 80s. Regulators caught on quick to the airline industry’s mileage scheme because of its inherent high value. But smaller rewards programs aren’t as scrutinized because they’re mostly engineered to promote repeat business. But Starbucks went the airline method and thought it could go under the radar because coffee is relatively cheap to airfares.

[@juliegolick]

This is what's happening with airlines and their rewards programs as well. Wendover Productions did a good video on it a few years ago. ("How Airlines Quietly Became Banks")

[@CausticCreations]

Brilliant. again. you'll be on JRE soon doode.

[@guy33909]

I noticed there registars transact quick

[@sethhall53]

Does Venmo do the same thing when I leave money in my account?

[@cutecatpenelope7867]

Love the show cheers for the great content over the years Looking forward to the A.I 3 part series

[@sergeantsapient]

I don't see the issue here really. I mean I guess you could argue from the perspective of the psychology behind prepaid cards and all that, but from the customer's perspective they get exactly the amount of money they put in back as a good or service. They're not aware of all the background stuff going on with investments and loans and whatnot. I feel like they could be more transparent about it because honestly that never hurts but I don't really think this should be illegal. Also, I don't want the government to get involved. The first question they're going to ask themselves is "how can we tax this?"

[@EugeneKee]

Agree, this type of scheme must be transparent and must earn interest aside from this free drinks/items they offer by putting money in this card.

[@Wog68]

Just like a shark loan is allowed in USA, these businesses should pay shark interests on customers, $$$ they hold on gift card, trade-in amounts and reward programs. OR shark loans and any kind of lending or borrowing should be prohibited.

[@Campaigner82]

I had no idea about that…. Good info.

[@glennjanot8128]

I don't see anything wrong with what Starbucks is doing. Correct me if I'm wrong but those gift cards and the money loaded into the app can't be redeemed for cash, right? Which means that anyone buying a gift card is essentially purchasing something from Starbucks, just that the product is handed out later. So, unless Starbucks suddenly closes or someone who bought a gift card would have to travel dozens, if not hundreds of miles, to redeem one, they simply bought a product

[@InventorZahran]

This reminds me of how airlines are just credit card companies that fly planes as a side hustle...

[@leymb141]

It’s win-win between starbucks and consumers. Starbucks tactics is just fair with consumers. Consumers get what they paid, starbucks is not stealing consumers money. Like you make this videos, and gets money from the viewers. Some viewers intentionally watch your videos, some are just accidentally played, yet you earned from them. Bad things happening on this world are the corrupt politicians, and bank who gives no-interests when you save your money to them. At least in starbucks or any sort of coffee shop, you save your spending like 20% and makes you happy.

[@Bob-ke9in]

Here's my 2 cents - I maximize my spare cash by investing in money market funds. I can't fault Starbucks for maximizing the return on it's cash balances too. However, since they are so big, they need to be watched to make sure they don't do anything which could jeopardize the financial system.

[@enargins]

There's a major error with the video. You link the Starbucks reward (star) system with putting money on a card. That's not true. The reward system is linked to spending money from any source. All you need to do is scan the app at the time of purchase so you get credit for the purchase and get the reward stars. But you can pay with the app (preloaded funds) or you can pay with a physical card. Preloading funds is NOT a requirement to get rewards. It's just a convenience so that you don't have to use a physical card, but can just pay with the app instead.

[@alexmiles40]

Good video. I don't buy Starbuck's anymore, but good info. THX

[@acctsys]

Looks fine to me. As one of those who don't use the free cards I get as gifts from the company, I often say that I prefer cash, and don't value these. I get to sell cards to office mates sometimes.

[@fy7589]

I think, as a software developer, they should be publishing what they are doing with the money they collect from the app, otherwise doing this kind of thing in secret should be illegal because it's immoral. But what if they accidentally invested all the money into a Quasi Ponzi scheme and lost. How will they pay back? Remember they don't have cash, that's why they are using your money to invest. Once this happens, their stocks may tank too. And they may even declare bankruptcy after that. They made a mistake and lost your money, the money you put in will probably be gone for a while, and by the time you receive any compensation, it'll become worth less. Yeah I know this is a very unlikely for a company like Starbucks and you probably don't even care about the $10 dollars if you get ripped off like that. But this doesn't stop from other bad actors from creating their own applications and collect little money for an unnecessary function, then invest your money into a Ponzi scheme they're a part of and lose it all. The worst part is, because it's legal, most secret partners will get away. They just lost a bad bet. It wasn't illegal. This is why they must declare and report what they are doing with the money they collect from the apps and if they do something else, they should receive a punishment by law so bad actors can do less harm. That's what the legislative body's function, to make stealing and other bad things less attractive.

[@Arijit_Das]

You forgot to mention India which is leading the charge in this case. There are proper regulations and systems for these kinds of financial services in India.