Wednesday, August 21, 2019

Starbucks, monetary superpower



I recently spent some time on Twitter discussing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 monetary wonders of Starbucks. In this post I'll bring a bunch of tweets togecá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r into a single blog post.

I don't go to Starbucks very often, so I only recently learnt that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company has succeeded in getting many of its customers to stop using cash and debit/credit cards to buy coffee. Instead, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are using  Starbucks's own payments option:
Starbucks has around $1.6 billion in stored value card liabilities outstanding. This represents cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 sum of all physical gift cards held in customer's wallets as well as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 digital value of electronic balances held in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks Mobile App.* It amounts to ~6% of all of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company's liabilities.

This is a pretty incredible number. Stored value card liabilities are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 money that you, oh loyal Starbucks customer, use to buy coffee. What you might not realize is that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se balances  simultaneously function as a loan to Starbucks. Starbucks doesn't pay any interest on balances held in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks app or gift cards. You, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 loyal customer, are providing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company with free debt.

Starbucks isn't cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 only firm to get free lending from its customers. So does PayPal. That's right, customers who hold PayPal balances are effectively acting as PayPal's creditors. Customer loans to PayPal currently amount to over $20 billion. Like Starbucks, PayPal doesn't pay its customers a shred of interest. But Starbucks's gig is way better than PayPal's. PayPal is required to store customer's funds in a segregated account at a bank, or invest cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m in government bonds (see tweet below). So unfortunately for PayPal, it earns a paltry amount of interest on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 funds that customers have lent it.

Starbucks, on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r hand, doesn't have to keep customer funds in a low yielding segregated account or government bonds. Why is that? PayPal allows people to cash-out of PayPal dollars into regular dollars, so for regulatory purposes it must keep an adequate reserve on hand to facilitate redemptions. But cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 only way to cash out of Starbucks balances is to buy a coffee--a promise that Starbucks can always keep! And so Starbucks can immediately put its customer loans to work in higher-yielding opportunities like funding its operations and expansion.

In addition to borrowing from its customers, Starbucks also borrows from professional investors. Here's a list Starbucks's long-term debt:


Starbucks is paying an interest to bond and note-holders that ranges as low as 0.46% (on its yen notes maturing in 2024) to 4.5% (on its 2048 notes). You can see why borrowing from customers in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 form of stored value card liabilities is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 better option. By expanding its borrowing from its non-professional lenders and using cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 proceeds to cancel its debts to professional lenders, Starbucks can make an immediate profit.

But cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re's more. As I pointed out in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 following tweet, don't forget breakage. Bond and note holders are pros. They don't forget about debts. But customers aren't so exact. They are sloppy, or busy, or forgetful, which means that many gift cards and balances will go unspent:

Each year Starbucks recognizes that a portion of its stored value liabilities will be permanently lost. This is known as breakage. Starbucks recognizes this amount as profit. In 2018 cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company recognized $155 million in breakage, around 10% of all stored value balances. Wow! Starbucks already pays just 0% on its debts to customers, but add in breakage and that equates to a roughly -10% interest rate!

On Twitter, Wayne points out to me that I need to add back cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 impact of Starbucks rewards. App users receive stars on each purchase which can be saved up for free coffee. This functions as a form of implicit interest that Starbucks pays to its customers.

That's a good point. But if were going to bring rewards into our calculation, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r non-pecuniary flows that need to be added in too. Keep in mind that each payment made through cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks app is a payment that isn't made by credit card. Since each credit card payment will cost Starbucks 1-2% in interchange fees paid to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 card networks and banks, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company saves a lot of money by guiding customers to its payments app. As for Wayne, while he may earn an implicit interest return in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 form of Starbucks points, by forgoing a card payment he's giving up on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 associated cash-back or airline points.

Anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r flow that needs to be accounted for is data. By capturing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 customer's wallet, Starbucks is getting loads of free but valuable personal information that would ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rwise be lost, or for which it would have to pay. Any customer who pays with cash forgoes rewards, but at least cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y get to retain cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir information. 

Adding all of this up, (0% interest + breakage - rewards + interchange savings + customer information), Starbucks's stored value liabilities are a terrific liability to have.

More generally, I think this calculation demonstrates how providing financial services to a retail customer base is a great business. Retail customers don't seem to be too fussy about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 return cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y get. And cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are busy and distracted and sloppy and forgetful. Take central banking, for instance, which serves a retail clientele. People are pretty happy to hold banknotes that pay 0%. But you never see businesses or professional investors hoarding banknotes. They quickly return cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 cash cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y take in during cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 course of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 day to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir bank so that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y can harvest interest. Commercial banking is also a good example. Like Starbucks, banks are able to borrow from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir retail customers at a measly rate approaching 0%. But professionals who lend to banks by purchasing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir bonds require a much higher rate. To top it off, retail customers unnecessarily sign up for high-fee products and avoid changing banks when cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a cheaper option.  

Why doesn't every retail chain try get into this game? By borrowing as much as cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y can from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 non-professional public, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y'd steal plenty of profitable business from central banks and retail banks. Well cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y do. Gift cards are a big business. And if you think about it, retailers are perfect candidates for providing monetary services to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 masses. Like banks, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y already have a network of physical stores. But none of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m have been successful at it as Starbucks. Walmart is much bigger than Starbucks, for instance, but it has just as many gift card balances outstanding:

Perhaps Starbucks's success has to do with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 regularity and homogeneity of Starbucks purchases? And so customers are willing to preload a dedicated account? I'm not sure.

In any case, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are probably a few Starbucks executives who'd love to grow cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 amount of negative yielding liabilities that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 firm issues. Why stop at $1.6 billion in stored value liabilities? Why not grow cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 program to $5 billion, $10 billion, or $100 billion? It would be a terrific business line to get into.

The problem here is that Starbucks only sells coffee. Coffee is great, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 demand for dollars that are only useful for buying coffee will always be limited. To really grow cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 amount of stored value liabilities it issues, Starbucks would have to increase cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 usefulness of Starbucks dollars. One way to do this would be to open up cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks app up to ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r stores. If consumers could also buy Big Macs with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 balances on Starbucks App, this would increase cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 demand for Starbucks balances. To secure McDonald's cooperation, Starbucks would have to share cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 savings, breakage, and data. Maybe companies like Home Depot and Costco would join cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks-McDonald's alliance. (And ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r chains, say Kroger and Burger King, might join cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 competing Walmart Pay alliance).

Sure, each of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se companies could simply pursue cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir own independent stored-value liability programs. But wouldn't an alliance be better? From cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 customer's perspective, balances held in a single payments app that can be spent at Starbucks, McDonald's, Home Hardware, or Costco would be far more useful cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n dollars held in four separate and walled-off apps. And so collectively cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se stores should be able to get cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 public to hold more stored value card liabilities than cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y could individually. Which means more breakage, free loans, and data for everyone (and less for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 banks, card networks, and central banks).

Who knows if it would be successful. And it might not even be possible from a regulatory perspective. But it would be tempting, no? In a world where most debtors have to pay interest, being  a debtor who earns interest is pretty hard to beat.



*I believe that current portion of deferred revenue is equal to around $174 million. This comes courtesy of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 current portion of an up front royalty payment from Nestlé. So cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 stored value card liability is actually closer to $1.46 billion. Still pretty high. 

42 comments:

  1. > One way to do this would be to open up cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks app up to ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r stores.

    This might also reduce cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 amount of breakage though... consumers might be less likely to forget about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir card balances if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are useful for buying more than just coffee.

    Might be an interesting experiment for Starbucks to run on a limited scale.

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    1. "This might also reduce cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 amount of breakage though... "

      Good point, Alex. And Starbucks might also lose some control over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 customer experience, which it might not want to risk.

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    2. Then it just becomes a wallet!

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  2. This is awesome. I never knew Starbucks benefited so much from having customers store gift card balances!

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  3. Great article. Don't think cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is any chance for McD to go with SB racá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r than solo, but calling attention to this better-than-free source of financing is quite insightful.

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  4. It's worth pointing out that it's unlikely customers are missing out on miles and/or reward points. A customer who is likely to purchase a coffee with a credit card is probably almost as likely to reload cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir balance with a credit card (which also means that Starbucks wouldn't completely avoid transaction fees albeit would avoid some of fixed cost fee per transaction by mandating a minimum reload).
    They also frequently incentivize reloads e.g. buy $10 worth of credit, receive $15; a marketing expense but if you're looking at liabilities as a 1:1 without considering costs cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n also going to factor in,

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    1. PK, good points. Yep, I missed that. Wayne would still get credit card rewards when he loads balances. And yes, Starbucks still has to pay interchange on Wayne's reload, although cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y'd save money since its cheaper for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m to process one large $10 reload than four separate purchases of $2.50 coffees.

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    2. However, almost all credit cards don't offer points on recurring purchases. I have tried a number of my cc's to refill my starbucks app and none of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m give me my cash back.

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  5. Online orders for in store pickup debit from your Starbucks account. So you have to top up that account, Minimum top up is $10, and defaults to $25. Could be a reason cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a lot of $$$ saved up vs ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r restaurants/retailers

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    1. Interesting, I didn't realize cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re was a minimum top up of $10. That will definitely allow Starbucks to save on interchange (see my thread with PK above).

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  6. Back in 2012 I found an exploit [1] that let you fabricate card balances. They fixed it 2012, but in 2015 anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r person found cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same issue [2].
    I have no idea why cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y would not be using transactions, and make cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same mistake twice. It really does make me wonder how much FAKE money is inside of that BILLION DOLLAR pot.

    I also found similar issues in 2017 for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir Thailand division. But this is at least understandable as Thailand operates its own Gift Card system.

    [1] https://chadscira.com/post/556999d91cb00914380006ee/Re-Starb... [2] https://sakurity.com/blog/2015/05/21/starbucks.html

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  7. So what you are explaining in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 end is basically facebooks attempt with libra.

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  8. > Keep in mind that each payment made through cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks app is a payment that isn't made by credit card. Since each credit card payment will cost Starbucks 1-2% in interchange fees paid to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 card networks and banks, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company saves a lot of money by guiding customers to its payments app.

    But to load my Starbucks app with money, I use a credit card, so cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y end up just paying that up front, no?

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    1. Probably quite a bit less though due to fixed per transaction costs.

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    2. Furcá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r to Sunny's point, credit card fees as a % of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 transaction value +a fixed amount (10 cents is common). So a low dollar transaction is much more expensive than a high dollar transaction. When you load $50 to your Starbucks card with a credit card, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 cost to Starbucks is much less than if you bought 10 lattes separately.

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  9. Eyeroll....when my savings account pays 0.5%, I'm not going to resent a free drink every 150 points as a "reward" for maintaining a relatively small amount of cash on my SB mobile app. And, BTW, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same could be said for Chic-Fil-A. I wonder if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 balances on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mobile Chic-Fil-A app show up on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 corporate balance sheet. But, outside of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 replay of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ever popular "hatin' on Starbucks" meme, you bring up a great point. The unused balances on millions of gift cards. What about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 unused balances on millions of cards used for product rebates?

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  10. I have always said that "in a few years, everything in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 world will be made by Halliburton, sold by Amazon and paid for using Starbucks gift cards."

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  11. 2 points on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 additional benefits:
    1) Starbucks is still paying card merchant fees....just on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 initial or reload larger transaction (ie when I put $25 into starbucks $, my credit card is charged $25 and presumably Starbucks pays cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 2% exchange fee of $0.50)
    This is instead of 5 $5 charges for my weekly latte (which Starbucks would pay $0.10 interchange fee on each). This is really a PV loss, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are paying $0.50 now vs. an 5 period annuity of $0.10 per week.

    2) Also, I benefit from credit card rewards....in reality in advance of my consumption, so cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is an (albeit) small PV value of getting 2% credit card rewards on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 $25 reload today instead of 2% on $5 lattes over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 next 5 weeks, etc.

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  12. Um, this does not work so well for SBUX if/when we get deflation and negative interest rates.

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  13. I think fintech startups and Companies have already thought and started implementing cross-payment technologies using cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir own mobile apps which can let a customer use his digital wallet in a every business anywhere in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 world. Let's also wait to see how Libra will disrup global payments.

    Greetings from Acá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ns
    Stathis Kassios
    www.skasios.com

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  14. B to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 BIDAugust 24, 2019 at 1:06 PM

    The breakage % is stunning. I worked at a competitor of Walmart in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 early 2000's and our breakage at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 time was around 1.5% to 2.0%. Clearly we were being exceedingly conservative, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se were uncharted waters... Gift cards were a new phenomenon, no one knew how consumers would act in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 longterm.
    One thing that never occurred to me at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 time and I would like to know cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 answer if anyone has one is. Why aren't gift card issuers required to escheat cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 abandoned value on giftcards as is required on ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r financial assets? Anyone know cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 answer?

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    1. On escheatment, I believe cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are different rules in each state.

      Someone asked me cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same question on Twitter. Here is my response:

      https://twitter.com/jp_koning/status/1164534109978468355

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    2. Some states have excluded gift cards from escheat requirements if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y don't expire or bear fees. Some retailers have formed giftco entities to be cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 issuer in states with favorable laws, so those laws apply. Ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rwise, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 retailer escheats according to where cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 card was purchased. Since many cards are issued anonymously or through third party distributors, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 retailer doesn't know and avoids escheat.

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    3. Thanks Brenda, very helpful

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    4. Good catch, Brenda. Escheatment laws vary quite a bit from state to state - and not all states have cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m. Clearly, Starbucks is finding plenty of gravy even with this regulations in place.

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  15. The way cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y have accomplished this is because in order to earn rewards in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 app, users must load funds to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir starbucks account aka gift card. You can't just use it as a stand alone reward program as you pay with a card/cash at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 counter. And thus as people want cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir rewards, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y load money in larger increments than one drink at a time, which saves Starbucks at minimum cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 per transaction fee if not cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 % fee.

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  16. Question: how do you load a balance on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 app though? Starbucks pay a credit fee when customers add a balance

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  17. There's a whole ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r way Starbucks is, effectively, stealing from US, its customers. With every OTHER Rewards card I know, when you "earn" a Reward, that reward is YOURS for at least a stated time. THIS IS NOT TRUE WITH STARBUCKS. Each purchase gives you stars which have an Earn Date and EXPIRE six months later. Enough stars gets your reward ... ONLY until cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 OLDEST star making up cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Reward hits THAT STAR'S expiration date. NOT THE REWARD mind you, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 INDIVIDUAL STARS that make up that reward. So, you take 5 months, 28 days to earn enough stars to get your Reward of a free item, and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y email or app you, that you Earned a free Reward, you can go to Starbucks THREE DAYS LATER, expecting to use your reward, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y don't tell you that if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 FIRST STAR that made up that Reward just expired, too bad: NO FREE ITEM FOR YOU that day.

    If you BUY something that day you will now again have enough for your Free Item ... as long as you go to use that Reward before cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 NEXT OLDEST star expires. And on and on. So you can keep being told you have EARNED a Reward, but never actually GET that Reward. (Yes now you can use fewer stars for extra syrup or an espresso shot, but I suspect most of us want our freebie.) Again: every ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r reward program I know once you earn your reward YOU EARNED IT and it will expire but you KNOW what day it will expire and can count on it. Here, unless you track EVERY SINGLE STAR DATE you will find yourself with no free drink over and over again. I know because this happened to me.

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  18. I don't know if this is widely known but I use my Starbucks card internationally. Some countries are OK with this whilst iirc Korea and China have separate schemes. Interestingly, I can establish auto top-up on a card from my own country's stores but not from, for example, a US store. I guess this is anti-money laundering.

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    1. Wow, I've never tried it. What country's SB card do you use to pay internationally?

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    2. UK card works internationally. US card works internationally, just won't accept internet top-up, has to be in person.
      Costa used to have cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same system of payment on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir cards (in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 UK). When cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y withdrew that and switched to just loyalty I switched to SB, just before cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y introduced cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir own version as discussed here; must be a few years ago now.

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  19. If PayPal is regulated like a bank, does that mean cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y only have to do hold cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 reserve ratio on account, 10% of US customers funds?

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  20. Few points to keep in mind:

    1) Their liability number is not a true reflection on breakage. That $1.6B liability number includes cards cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y sold cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 day and week before reporting that haven't had a chance to be redeemed. While cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 number sounds astronomical, so is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 total amount of cards that Starbucks sells so it's not surprising that number is so big.

    2) According to last Starbucks earnings call, 42% of that quarter's U.S. revenues were conducted on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 app. That's 100% card-related and if you do cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 math it equates to $1.797.096B--an amount that exceeds cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 liability.

    3) Starbucks doesn't host a card program for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 breakage or interest income. They do it to sell coffee. If you get a card that you're not going to use, regift or sell it.

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  21. Thanks for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 great article! Really appreciate your analysis and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 conversation it sparked. We consult merchants on gift card programs & produce a podcast. We recently did an episode on Gift Card Escheatment Basics https://bit.ly/32bHtFy and we would love to have you as a guest on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 podcast to continue cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 conversation.

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  22. Once again I'm struck by how understanding at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 level of money completely obscures how and why a system works. The insights offered in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 article were good ones. Fascinating. I'd not considered it that way before because I'm not a finance guy. What I AM is a reasonably intelligent consumer. And cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Starbucks app is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 most seamless purchasing tool I've ever used ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r than cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Uber app. It makes cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 buying experience every time I go to Starbucks effortless across multiple iterations. I don't really care much about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 star rewards although I do use cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m. What I love is opening cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 application, making one touch, and completing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 entire purchase in a couple seconds. No cash to calculate or carry or no credit card for a tiny charge. It's cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 entire experience of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 application in use that gives me pleasure - never a factor when cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bean counters start breaking things apart.

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  23. Negative interest rates turn this entire argument on it's head. I WANT to hold cash in a negative rate environment. Governments (cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 primary purveyors and beneficiaries of negative rates) can steal our wealth 2 ways: eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r inflate it away over time, or steal it directly via negative interest rates. Holding cash allows one to avoid cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 second of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se two.

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  24. What are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 store value card liabilities for Amazon?

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    1. $3 billion in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir last annual report. Apple was $7+ billion.

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  25. How do cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y earn breakage if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are no fees? What mechanism are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y using to monetize cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 breakage outside of a fee on dormant balances?

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    1. The FASB has establishment standards for claiming breakage income in proportion to redemption pattern.

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  26. This wasn't mentioned in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 post (which is awesome, by cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 way), but one of my colleagues pointed out that many Starbucks cards are set to auto-renew once you hit a certain point. So it is quite literally automated replenishment of free debt. Mind blown!

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