Starbucks is Secretly a Massive Bank

49 thoughts on “Starbucks is Secretly a Massive Bank”

1. Gotta love a company that makes money off of their customers rewards money and then in turn asks you to tip the 16yr old that poured your coffee coffee so they don't have to increase their employees pay themselves.

2. Sorry to say this but your videos are usually a lot more in-depth and researched. This one was very superficial. Love your content but this one was weak. Just my 2 cents.

3. this guy loves exposing US casino capitalism schemes.

4. This is like McDonalds actually being a real-estate company

5. If you put money on a prepaid card and that money is not retrievable (other than through goods) then you have spent the money, it's not yours anymore. A one way transaction, Starbucks can do what ever they want with it.

6. Happy to say that in Australia it’s not cool to drink starbucks. We support quality cafes.

7. I think this traditionally banking is the real crime. The Apple Card and Apple Cash is done so brilliantly, and the 4.0APY return in the apple savings account is 10x what traditional banks give you. Plus the customer service, ease of use, and how I feel like apple genuinely doesn’t{t want me to have to pay interest, makes me appreciate apple more.

8. They should pay the consumer interest with money left on the Card.

9. 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.

10. Am I the one in the US who has never bought anything at Starbucks? I was in one some ten years ago when I followed my son in. They didn't sell any coffee as far as I was concerned, so I bought nothing.

11. Honestly, I don't have a problem with this system. They tell you you can put money on a card and use it in their stores. They're not promising you anything in return (except rewards for spending the money or a bonus for loading a certain amount). But there's no promised investment return, like with stocks or bonds. And the customer should know that they're giving them an interest-free loan. But it's a convenience to the customer, so they can pay with the app, instead of having to take out a credit card every time. So I really don't see the issue here. As noted in the video, it's not like people are investing thousands of dollars. They're maybe putting $20, $50 or whatever on the card. I really don't see the issue here.

12. I think the name Starbucks was taken from the lead character in the 1950s movie The Rainmaker, a con man swindling people, played by
    Burt Lancaster. Hmm.

13. 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.

14. You call it an interest-free loan. However, if the customer gets a discount or free items after they spend their money, this can be seen as the interest for the customer. Even though it's not the classical interest system (money based and with fixed interest intervals), this could be quite significant for someone who purchases at Starbucks regularly

15. You should cover the fact that McDonald’s are a real estate company

16. I remember having a $40 gift card for Vans. Couldn't buy anything other than shoe laces. Even the cheapest Vans cost over $40 including taxes.

    That card sat in my wallet until it expired. Free money for Vans.

17. i dont think most people are even aware that banks are investing their money for profits or that taking out debt in the form of loans and mortgages has the effect it does, let alone thinking about starbucks pre paid cards…..no wonder a Latte is £4.20 these days, just keep raising the price of people caffeine addiction no worries, definitely nothing like CC or MCd models

18. The genius thing is that since you can't cash back out they don't have to invest in super liquid assets. They don't need to have a bunch of cash ready . You can only cash out in merchandise and they have plenty of that on hand already.

    Yes they do have to cash out to pay themselves for the merchandise but there's no rush to do that when you're a company of their size

19. More regulations is not always the answer though, who says we can trust the governments more than corporations? At least with corporations you can opt out, not so with governments.

20. This doesn't make any sense AT ALL.

21. wow, i did not realise this has been going on and i dont like it at all. many companies does this when they have to pay like a missed payment in the salary or whatever they say we pay it in 4 weeks and they use the money in the meantime. just as annoying. reward cards should be only about points, not real money. if you buy your coffee for real money why give it to them before you need the coffee? payment will take the same amount of time. im even against the bank using my money but what can we do? this is the system we are living in 🙂

22. I'm not sure what time frame the "0.05%" refers to, but if companies estimate how much of the funds from customers are truly "lost" (funds that will never be redeemed), they could move those funds to long-term, higher-yield products, possibly even just buying stocks (such as Starbucks stock!). Sorry, I'm not sure I'm helping.

23. Starbucks should give the customer 0.01 percent of 0.05 they get from the interest. That is what the banks do and it's only fair. While that number is terrible interest it is only fair you share with the customer as it is the customer's money. I also wonder what is the average time the customer keeps the money on the card. Most Starbucks fans drink it daily so the money might not last long enough to build up even a cent of interest.

24. And now the questions of all questions. Are banks now a good thing or a bad thing, and what are the alternatives? I'm looking forward to the diakusion, this seems like a very educated community here. 😉

25. Caffeine is a horrible drug being pushed by legally.

26. Never had a starbucks coffee… Think I wont bother either

27. People are free to buy reasonably priced coffee. They buy Starbucks because LiFeStYlE. It's a free country, I don't see any issues here.

28. Bro your video is sponsored by The Kings Grenadier Guard

    How coooool

29. This is just store-credit…

30. Starbucks has a finance department. It doesn’t make them a bank. Cash sitting around loses value. They’re keeping pace with the rate of inflation with the short term investments. Not taking deposits for personal/business use or loaning the money.

31. Now do airlines.

32. The time to worry is when you try to make a withdrawal from your bank and they hand you a coffee.

33. To be honest I don’t see anything wrong with it

34. This all comes down to it 'not mattering' to the customer… the 'interest' they would get on their coffee money is not worth the effort of going to the bank to deposit it.

    Starbucks can make it work on a big scale…

    I hate their disgustingly dirty premises so would never use one, but I don't see a problem here.

35. Never realized The Lonely Island founded Starbucks

36. This practice is largely unchanged since department stores began offering gift certificates about a hundred years ago. My first experience with the twist of adding rewards to gift certificates was McDonald's in the 1970s when you could buy booklets of discounted certificates that could be redeemed for face value. This particular installment of ColdFusion may have been better titled as "Water is Wet."

37. in this case amazon too will become a bank. Is a grocer giving credit is an NBFC

38. Is it 2018? How fucking late could you possibly be to make this video? Everyone has known this for years, and every other YouTube account has made a video about it. Sad how far this channel has gone down in quality content.

39. buy crypto: we have to take care about people willingly buying those assets
    lending money to companys probably not knowing: we MIGHT have to regulate that

40. This is what car rental companies do with your deposit…!!!

41. With the amount of knowledge and research this man does I feel like he is a secret bilinear😅

42. "There are three Starbucks within walking distance from where I live."

43. I think that two things need to be implemented. 1) A balance cap. 2) Disclaimer.

44. My Queensland Translink card is the same. But I found out recently when I went to use it that it had expired even though it had a positive balance. I was able to extend the expiry date, but this will expire again.

45. recent lawsuit meant nothing for them. hahaha

46. This is exactly the kinda of thinking that leads to overgrown government. Consumer prepaid for products and services has been around for decades. The companies book those as unearned income in current liabilities. As long as the companies fulfill its obligations (to provide said products services + whatever incentives), the deal is completed. How a company utilizes cash on hand is a business decision. The deal wasn’t, “Hey give me $10, I’ll invest it for you.” The deal was, “Hey give me $10, I’ll give you $11 worth of coffee and stuff.” What? You are going to start telling gas station to not expand location? You are going to start telling banks not to get into small business loans? You are going to start telling supermarket chain not to expand into their supply chain? How far do you think your reach should be. Oh the government? So now you want to overreach and you want me to spend my tax money to support you via government spending?

47. Dagogo, this is the first of your videos that actually disappoints me. Starbucks has its flaws as a company, but there’s nothing intrinsically wrong at all with how they use the funds they legally and transparently collect. It is the users who, by their own volition, decide to buy product in advance. Starbucks does fulfill its part by providing the product whenever you go and redeem it (at then-current prices), and this is no different than paying for it with cash on every visit. On the other hand, all decently-run companies with excess cash will find investment vehicles to use that cash; it’s the smart way to do it. Otherwise, cash parked in savings accounts is getting eaten away by the banks and the countries’ financial systems.

    The part where you mention regulators only means governments simply want to demand and enforce their getting a slice, which is abusive. There is zero interest (or need) to “protect the consumers” in this regard. As for the customers “feeling they are getting the short end”, that’s nothing but greed. Nobody stops a consumer from investing his own money instead of spending it on a rewards card, the same way nobody forces them to buy from Starbucks. (Plus, surely those who feel shafted imagine they’ll get millions in returns themselves if the company somehow shared it, without realizing how little of a fraction their own money represents, out of the big pile. This means, they would also get but a tiny return.)

48. Gift cards accomplish basically the same thing for most companies that offer them, in addition to creating and maintaining a way for scammers to bilk people out of their money as well.

49. In the Starbucks example you skipped over quite a bit of detail such as why a customer would chose to load up their card vs just pay for the order. The app explains this quite well, when you order through it you can pay for your $5 coffee or load up a $25 gift card, and you earn double stars through the latter. Your argument that it provides no value to customers is disingenuous, they earn free stuff faster.

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