Published: November 2018
Why Starbucks loves gift cards
Circulated: September 9, 2019
Gift card balances function as a loan to companies, such as Starbucks. Starbucks does not pay interest on balances held in the Starbucks app or on gift cards.
As of September 2018, Starbucks customers held $1.63 billion of gift card balances. When a card experiences “long periods of inactivity”, Starbucks recognizes this as breakage income. Customers are forgetful and can lose cards leading to $155.9 million of breakage income in fiscal 2018, or 9.6% of gift card balances.