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Starbucks, monetary superpower

jpkoning.blogspot.com

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Re: Starbucks, monetary superpower

#11

Post by bitwize »

jahbrewski wrote: post #2

Not so sure it's due to "coffee addicts" so much as the fact that Starbucks gift cards became the perfect, generic, gift. How many times have you been on your way to X, needed to bring a gift, and just run into Walgreens?

Starbucks coffee and espresso drinks are "will do in a pinch" for me. I'd much rather frequent a local coffee shop with better espresso than what Starbucks serves.

I think Starbucks makes more money these days from its sugary cold drinks than its hot coffee/tea/espresso.

Re: Starbucks, monetary superpower

#12

Post by notatoad »

>Since each credit card payment will cost Starbucks 1-2% in interchange fees paid to the card networks and banks, the company saves a lot of money by guiding customers to its payments app.

i'm not sure this is true. they're definitely saving something on the interchange, but not 1-2%. reloading your starbucks card is done by a credit card payment, so they're still paying that percentage fee one way or another.

Re: Starbucks, monetary superpower

#13

Post by ben1040 »

The part on "breakage" was interesting. I had recently searched my name on my state's unclaimed property bureau and found I had about $15 and change to claim.

I filed the claim form, and when I got the check, the checkstub said it was from an unused Starbucks account balance.

If last year they had $155 million from abandoned accounts that they could legally just pocket, I wonder how much they also had to send over to various states' unclaimed property offices.

Re: Starbucks, monetary superpower

#15

Post by cbhl »

The magic trick here is that Starbucks Rewards -- their "free" loyalty program -- requires using a Starbucks Card (virtual or physical) in order to make your purchases.

Under the old system (prior to ~Apr 2019) you had to make $150 in purchases annually to get "Gold" status, and then you got a free reward after every ~$62.50 in Starbucks spending. The new program has no minimum, and tiered rewards between $12.50 and $200 of spending.

Re: Starbucks, monetary superpower

#16

Post by kube-system »

8bitben wrote: post #9

As for Wayne, while he may earn an implicit interest return in the form of Starbucks points, by forgoing a card payment he's giving up on the associated cash-back or airline points. I don't agree with this. While merchants pay interchange fees based on the value of card transactions (plus a flat rate per transaction IIRC), as a cardholder rewards are earned only as a percentage of the total purchase, and are not infl…

I thought the same thing. I fill my Starbucks balance up with a credit card, and I earn points on that. And that money is basically a 30 day free loan anyway. It's basically a leveraged investment payable in coffee with almost zero risk.

Re: Starbucks, monetary superpower

#17

Post by ben1040 »

8bitben wrote: post #9

As for Wayne, while he may earn an implicit interest return in the form of Starbucks points, by forgoing a card payment he's giving up on the associated cash-back or airline points. I don't agree with this. While merchants pay interchange fees based on the value of card transactions (plus a flat rate per transaction IIRC), as a cardholder rewards are earned only as a percentage of the total purchase, and are not infl…

Yep. And you're still getting any special merchant-specific rewards the card company might offer you. I just reloaded my Starbucks card using my Amex, and Amex had a promo that offered a 10% credit back on Starbucks purchases, up to $5.

So I threw $50 on my card, I get 10% off the coffee, and earn back a bit on the Starbucks reward points.

Re: Starbucks, monetary superpower

#18

Post by jddj »

bitwize wrote: post #11
jahbrewski wrote: post #2

Not so sure it's due to "coffee addicts" so much as the fact that Starbucks gift cards became the perfect, generic, gift. How many times have you been on your way to X, needed to bring a gift, and just run into Walgreens?

Starbucks coffee and espresso drinks are "will do in a pinch" for me. I'd much rather frequent a local coffee shop with better espresso than what Starbucks serves. I think Starbucks makes more money these days from its sugary cold drinks than its hot coffee/tea/espresso.

For me too.

Starbucks is train station or airport "ehh, what did I expect?" coffee.

Re: Starbucks, monetary superpower

#19

Post by gamblor956 »

notatoad wrote: post #12

>Since each credit card payment will cost Starbucks 1-2% in interchange fees paid to the card networks and banks, the company saves a lot of money by guiding customers to its payments app. i'm not sure this is true. they're definitely saving something on the interchange, but not 1-2%. reloading your starbucks card is done by a credit card payment, so they're still paying that percentage fee one way or another.

They're not saving on the % fee, they're saving on the fixed portion of the interchange fee, which is between $0.10 and $1.00 depending on the card.

Re: Starbucks, monetary superpower

#20

Post by benmanns »

notatoad wrote: post #12

>Since each credit card payment will cost Starbucks 1-2% in interchange fees paid to the card networks and banks, the company saves a lot of money by guiding customers to its payments app. i'm not sure this is true. they're definitely saving something on the interchange, but not 1-2%. reloading your starbucks card is done by a credit card payment, so they're still paying that percentage fee one way or another.

Yeah the savings would be on the flat rate (Stripe charges $0.30, who knows that Starbucks pays). Grocery stores, convenience stores, etc, are also not selling Starbucks gift cards for free.
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