Putting the Bucks in Starbucks: Will the Coffee Chain Replace Banks?

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Starbucks (NASDAQ:SBUX) has a tight grip over the coffee industry, but Wired published a report Tuesday that illuminates the company also has an increasingly solid grasp on another sector that also significantly affects consumers: the banking one. The idea of Starbucks cards and virtual payments is no longer foreign to anyone, but Wired pointed out earlier this week that thanks to the current situation of the banking industry — a division that has seen better days — the coffee company has an increased opportunity to have a tighter hold over its customers and facilitate more bank-like transactions that consumers may be oblivious to.

Wired starts out its report by making the argument that in this day and age, you’re likely make more trips to Starbucks than your local bank branch, and it’s probably right. Then, it brings up the idea of Starbucks’s pre-paid cards, or “loyalty cards.” These can act as savings accounts and put Starbucks in charge of a lot of your money — an amount that banks could even be envious over. At this point, Starbucks’s prepaid cards represent two traditional banking functions now being handled by the coffee chain — payments and storing money.

Wired then brings up a third case: money transfers. If you buy a friend a coffee with your own Starbucks card, you’ve added the third function of money transfers, because you’ve taken money you’ve saved with Starbucks and used it to pay someone else while Starbucks brokers the transaction. It’s a stretch, but Wired still has a point. Of course, when you’re paying for someone else at the chain, you’re only buying them coffee, but as the publication points out, as Starbucks continues to build up the financial services infrastructure around its cards, it could start letting you use those cards to pay at other franchises it owns, like Tazo Tea or La Boulange.

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