The Bank of Starbucks?
Every year, about $14 billion gets loaded onto Starbucks gift cards. In any given financial statement, there's $1.8 billion in mobile wallets. That's a massive amount of debt.
It's debt because all of that is money that customers loaned to the company via their mobile wallets - a huge number of interest-free loans. Since the loans come from millions of individual accounts, the company will never need to repay them all at once. In fact, some of those loans will never need to be repaid: people forget about their accounts, apps, wallets, all the time. This is called breakage; in 2018, breakage gave the firm $155 million in straight-up profit.
The mobile wallet is great for Starbucks.
It means that they can take that money and invest it however they like. It doesn't have to be in super safe bonds and stuff like, say, PayPal. Because PayPal needs to return a customer's dollar for a dollar.
Starbucks gets to pay it back as coffees. And they can always honour a coffee. A coffee doesn't cost them what they charge for it.
If they were a bank, Starbucks would be in the top 10% of financial institutions in the country.
Which is why I was surprised when I heard the former Starbucks CEO Howard Schultz, on the Acquired podcast1, claim that he wasn't a fan of the app business model. His view is that the Starbucks experience, which is defined by the customer-barista interactions, has been diluted and made too impersonal by the mobile app.
I haven't interacted with Starbucks in the pre-app days, so I can't speak from experience. But the convenience of the app has definitely gotten me to buy more Starbucks than I otherwise would have.
To me, the app seems like a win for customers. It certainly is for Starbucks.
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