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Starbucks, monetary superpower

jpkoning.blogspot.com

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Re: Starbucks, monetary superpower

#51

Post by ben1040 »

js2 wrote: post #44
ben1040 wrote: post #13

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…

Hey, I didn't even know about this. I just found $10 in my name. Thanks!

You're welcome! That ten bucks is like 1.5 Starbucks visits.

Re: Starbucks, monetary superpower

#52

Post by buboard »

> each of these companies could simply pursue their own independent stored-value liability programs. But wouldn't an alliance be better?

Obviously it woudln't. He even provides the evidence why not. People top up their starbucks because they need coffee every day - it's basically a subscription , but they dont buy the same stuff at walmart every day - and the cost levels are widely different. Something similar happens to virtual credits for different games - Experts will tell you that it is better to have a separate economy for each game rather than one unified economy - and you should not even allow players to pay each other. Same reason why stock photo sites want you to buy credits for each one of them, or why each newspaper wants a separate subscription. The "Breakage" breaks up when the economies are unified.

Re: Starbucks, monetary superpower

#53

Post by dave5104 »

pweezy wrote: post #50

I've always thought that the main reason for Starbucks to push their card and reward program is to save on per-transaction credit card fees. By my understanding, in the US, typical merchant fees to accept a card are a flat $0.20-$0.30 transaction fee, plus 2-3% of the total dollar amount. The article mentions the interchange fee (the 2-3%), but for small purchases the transaction fee is more significant. I assume the…

> By my understanding, in the US, typical merchant fees to accept a card are a flat $0.20-$0.30 transaction fee, plus 2-3% of the total dollar amount.

That's correct, generally. But those can always be negotiated. And Starbucks probably has the volume to have some negotiating power. I'd be surprised if they didn't have a lower rate.

Re: Starbucks, monetary superpower

#54

Post by joncrane »

notatoad wrote: post #38
joncrane wrote: post #35

Earlier quoted context omitted.

So they don't charge any explicit foreign exchange fees, but "Currency conversions are based on currency exchange rates applicable on the date of the Transaction." Well can't they just use a super advantageous measure there? There's no pinning to any external rate in the language.

yes, they absolutely can. but they don't. They aren't trying to run a forex business, they're trying to sell coffee so they charge a fair rate. it's not going to be the best rate possible, but it's probably a better rate than anybody else at the airport will give you.

They have a captive audience. They literally only have to provide a rate that's roughly equivalent to the usurious "last chance currency exchange" counters at the airports.

Heck, since probably no one is paying attention that closely to their statements, they could provide even less favorable rates, and simply issue refunds to anyone that actually notices and complains, and still make more money that way.

Re: Starbucks, monetary superpower

#55

Post by aasasd »

sarhus wrote: post #21

Out of curiosity, the author mentions a possible alliance with another companies (McDonald for example) that would share savings, breakage, and data. Anyone would know if this kind of idea is behind or maybe related to Facebook Libra?

What's to know there? Obviously Libra will rack up loads of data on people's spending. Obviously any kind of financial middleman organization these days immediately invests money that it gets from clients for virtual bucks. (I'm surprised to learn that PayPal is limited in this regard, but maybe this report isn't the Singapore PayPal which serves European accounts?)

Re: Starbucks, monetary superpower

#56

Post by notatoad »

dragonwriter wrote: post #45
notatoad wrote: post #38

Earlier quoted context omitted.

yes, they absolutely can. but they don't. They aren't trying to run a forex business, they're trying to sell coffee so they charge a fair rate. it's not going to be the best rate possible, but it's probably a better rate than anybody else at the airport will give you.

> yes, they absolutely can. but they don't. [citation needed] > They aren't trying to run a forex business Right. Particularly, they aren't trying to sell services to people price shopping for forex, is an incidental convenience provided to a customer base that literally isn't even checking prices. Why you'd assume that the rates will be especially favorable is unclear.

i'm not assuming anything. when i use my canadian starbucks card in the US i have always been given a fair exchange rate.

Re: Starbucks, monetary superpower

#57

Post by ska »

drewg123 wrote: post #48
ska wrote: post #47

Earlier quoted context omitted.

Basically anything that is directly exchangeable for cash or useful goods and services is useful for money laundering, I would imagine. If you can fill one with stolen CC details and then either cash out in a store or sell for a discount, that's a pretty basic launder, no?

Being able to cash out a gift card seems like an interesting way to get a cash advance on your credit card, without paying cash advance fees. Surely the credit card companies are on to this, and prevent it somehow?

I'm not sure how many jurisdictions force them to allow cashing out. If I recall correctly California law says they have to, but only for relatively low value ($10 or $5 ?) so not sure how effective that is. So I doubt the CC companies are too concerned.

Of course if you are selling them below face value and it wasn't your card, its a different calculus.

Re: Starbucks, monetary superpower

#58

Post by joncrane »

gruez wrote: post #27
arafa wrote: post #14

Earlier quoted context omitted.

They can also be used for money laundering, as a result.

How would you launder money with starbucks cards? Sure, you can transfer balances with them, but that alone doesn't help you launder money. According to the treasury dept: >First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the fin…

One method would be to buy Starbucks gift cards with the dirty money, then sell the gift cards for "clean" money at a discount from face value.

There are no AML, KYC, etc regulations on Starbucks gift card balances.

Re: Starbucks, monetary superpower

#59

Post by lwf »

maurimo wrote: post #31

I keep wondering why people buy Amazon/Netflix Gift cards. Great, you converted 50$ into 50$ that can only be used on Amazon, and people may end up not using at all. This is also financing with negative interest rate.

If you don't have a credit or debit card it's one of the only ways to pay for the service, save asking to borrow a friend's card.

According to the FDIC, 6.5% of American households lacked a bank account at all in 2017.[1]

[1]: https://www.fdic.gov/householdsurvey/

Re: Starbucks, monetary superpower

#60

Post by chrisseaton »

lotsofpulp wrote: post #26
notatoad wrote: post #4

Earlier quoted context omitted.

the default setting on the starbucks app on my phone is to automatically top up every time the balance drops below $10. So starbucks basically has a permanent $10 loan from me. I'm sure i'm not the only one. actual gift cards given as gifts though are probably more likely to be used up and discarded, instead of being set to auto-reload and carry a balance.

That made me delete the app and avoid Starbucks. I was more than willing to pay with a cc, but they wanted me to give them an interest free loan?

Did you realise it was optional?
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