Starbucks claims $181M in revenue from unused gift cards (2022)

[ZooCow]

It's also a way for them to save on credit card processing fees by trading the fees of multiple (relatively) small drink purchases for one fee for the gift card purchase.

An often overlooked innovation of iTunes was delayed billing, which converted multiple separate song transactions into one bundled transaction to save on credit card transaction fees.

[Loic]

Highway tolls in France have been doing it for something like 20 years.

[hammock]

>delayed billing, which converted multiple separate song transactions into one bundled transaction to save on credit card transaction fees.

Uber and Lyft do it now. It ought to be illegal, or opt-in (with a discount to the customer). Delayed billing wreaks havoc on the majority of Americans who live paycheck to paycheck

[JohnFen]

Every so often, companies I've worked for have given me Starbucks or Amazon cards as rewards. I have no use for either of them, though, so typically I give them to someone else. Amazon cards are easy -- they go to my (adult) children.

Starbucks are more difficult, though. I sometimes have trouble giving them away, then they get lost or accidentally thrown away. I bet Starbucks has made more money off me from that than from me purchasing their products.

[streptomycin]

There are various websites that let you sell basically any gift card for like 80% of face value, such as cardcash.com. That's what I do with nearly every gift card I am ever given.

[ProAm]

Gift cards from work always go in the trash, they are a hassle to remember you have one, tote it around or redeem it at a place I probably don't frequent enough.

[smnrchrds]

It's one of those things that consumer protection laws should fix. By law, most gift cards cannot expire in my province in Canada.

> Gift cards purchased in Alberta are not subject to expiry dates and fees that lower their value over time. This includes cards purchased in Alberta on the internet.

https://www.alberta.ca/information-about-gift-cards.aspx

[papercrane]

Starbucks gift cards don't expire. It's standard account practice to recognize a percentage of your unused gift card balance as revenue as no company ever sees 100% redemption rates of gift cards. They call this "breakage".

[tesseract]

I think that's also true in most of the US for first-party gift cards like Starbucks.

The typical offenders for expiration dates and/or fees are bank-issued gift cards that run via a credit card network. Does the Alberta regulation cover those?

[97-109-107]

How the payments industry thinks of gift cards is a relevant article by our member patio11 - [More than you want to know about gift cards](https://www.bitsaboutmoney.com/archive/more-than-you-want-to...)

[forgotusername6]

I once had a gift card that had a management fee in the small print. By the time I remembered it the £10 had all been eaten by the 40p a month fee.

[mrguyorama]

This is no longer allowed in most of the US.

[superzamp]

Yikes that seems insane, do you remember which vendor it was?

[varispeed]

I found myself in an interesting predicament. I got given a £100 gift card to spend in a well known department store for my birthday.

I got this card 3 years ago and I have not used it yet, because I found that there is nothing really in that store that is worth below £100 that would compel me to go there or order online and items that interest me but are far more expensive, even considering the voucher I could buy cheaper elsewhere or even find such item used in as new condition.

So while I appreciate such gift, probably if someone scribbled £100 on a piece of paper it would have the same effect to me, but they wouldn't have to spend any money.

[osigurdson]

Gift cards are such an odd concept. Here is my gift: expiring cash that can only be used at one place.

[NoZebra120vClip]

Think about it this way: many people derive peace-of-mind from giving a gift whose purpose is known. Now, I can hand someone $20 and hope they don't spend it on booze, drugs, or prostitutes. Or I can hand someone a gift card, knowing they will spend it on Starbucks (not that expensive coffee isn't on a spectrum of vices anyway.)

I can't put my finger on it, but as someone who has wholeheartedly embraced a "cashless society" vision, I feel better about gifting people with gift cards instead of cash. I don't know if it's any safer to send them through the mail, but it seems customary to tuck one into a greeting card, so that's how I treat my relatives on special days. I often keep a gas station card on hand, because I don't drive, and it can be real useful to offer a fill-up to someone who gives me a much-needed ride.

[mirker]

But it’s more thoughtful. The purchaser thought long and hard about what place the purchasee can use it in.

[supertrope]

Convert your US Dollars to Starbucks Dollars!

[gffrd]

What a nice little interest-free loan for them!

[papercrane]

The interest free loan is more like $1B dollars. This $181M is the breakage, the left over gift card balances that are unlikely to be redeemed and they are recognizing as revenue. e.g. The $2 left on a $20 gift card that someone doesn't bother redeeming.

They also get another $1B of deposits from people loading money onto their app to pay for drinks. Starbucks is basically sitting on the equivalent of a small banks deposits at any given time.

[tamaharbor]

I had acquired $300 on a rewards on a card from Bright Health Care. But when I switched health insurance companies, my $300 was gone without warning.

[popotamonga]

In one of my businesses, hotel booking, i also sell gift cards and market them agressively in festive seasons.1 year validity. 45% goes unclaimed, its now 20% of total profit (all legal here, expiry date in a large font)

[el_benhameen]

That seems deeply unethical and, at least in California, illegal. Not something I’d brag about in any case.

[steve_adams_86]

I can see that leading to resentment among your clientele over time.

There's almost always a consequence for not providing value, and if 45% is unclaimed, that's not valuable to anyone but you.

I'd also wonder why so little goes claimed. I'd be worried about my product or service if people didn't want it, even if it was gifted to them.

[exabrial]

Sleazy, unethical, and probably illegal. As an example: Kansas for instance, among other states, has unclaimed property law and these things must be turned over to the state.

[benburleson]

That seems...sleazy.

[timgedenk]

gift cards also work insanely well in the software business, people are always searching for gifts, use this chance guys

[mandeepj]

Boat load of free money right there! Clearly a side benefit of operating at scale.

[LightBug1]

I'm sure this was an entirely unplanned enterprise...

[amir734jj]

Because the credit we load into account "expires". That's the trick they use to make money.

[rahimnathwani]

From Starbucks' web site:

"We do not charge any activation, service, dormancy or inactivity fees in connection with your Starbucks Card. Your Starbucks Card has no expiration date nor does the value on your Starbucks Card ever expire."