Starbucks has around $1.6 billion in stored value card liabilities outstanding. This represents the sum of all physical gift cards held in customer’s wallets as well as the digital value of electronic balances held in the Starbucks Mobile App.* It amounts to ~6% of all of the company’s liabilities.
This is a pretty incredible number. Stored value card liabilities are the money that you, oh loyal Starbucks customer, use to buy coffee. What you might not realize is that these balances simultaneously function as a loan to Starbucks. Starbucks doesn’t pay any interest on balances held in the Starbucks app or gift cards. You, the loyal customer, are providing the company with free debt.
Starbucks isn’t the 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 them in government bonds (see tweet below). So unfortunately for PayPal, it earns a paltry amount of interest on the funds that customers have lent it.
Here is more from JP Koning.