Starbucks Shakes Up the Banking World

David Dobbins
February 3, 2020

Experts believe Starbucks plans to enter the financial services industry. This belief is based on the huge sum of money Starbucks holds in stored value card liabilities and Starbucks’ investments in crypto. It also removed the word coffee from its signboard.

Billions in value card liabilities

Starbucks customers generate a massive amount of money purchasing Starbucks gift cards and putting money on the Starbucks app. According to Yoon Jong-kyoo, chairman of KB Financial Group, “The most used mobile payment app in the US was the Starbucks app, not Google or Apple Pay.” Starbucks’ 2018 annual report shows $1.6 billion in stored value card liabilities. Stored value card liabilities are money Starbucks customers loaded onto gift cards and the Starbucks app and have not spent.

Experts say this amount of cash will enable Starbucks to expand its presence into the asset management, currency exchange, loan and insurance markets. According to Hana Financial Group Chairman Kim Jung-tai, “Technologies have allowed coffee companies like Starbucks to be our rivals. It will be fine to call Starbucks an unregulated bank, not a mere coffee company.”

Significant investments in crypto

In addition to this influx of cash, Starbucks has made significant investments in the crypto industry. One of these investments is a partnership with Intercontinental Exchange Inc. on their app Bakkt – a consumer app for digital assets like Bitcoin. Once developed, the app would allow Starbucks customers to purchase a cup of coffee with Bitcoin. The app is set to launch in the first half of 2020, with Starbucks as the first launch partner.

With billions in cash, strategic crypto investments and subtle moves away from the word “coffee” should Starbucks be considered an unregulated bank? And if so, should it be regulated in the same way banks are?

The IRS’s response

The IRS has yet to respond to these moves by Starbucks, but it has expressed its opinions on crypto. According to IRS Criminal Investigation Chief Donald Fort, crypto is a concern for tracking illegal money.

And it’s no surprise the IRS is ratcheting up enforcement on crypto. See the latest updates to IRS crypto tax enforcement.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

David Dobbins

Content Marketing Manager
Share This Post

LATAM VAT & Fiscal Reporting
May 20, 2020
Sovos Acquires Taxweb, Extends Tax Determination Capabilities in World’s Most Challenging Compliance Landscape

Earlier this month Sovos announced its second acquisition of 2020, completing our solution for Brazil with an unparalleled offering that solves tax compliance in the place where it is most challenging to do so.  Too many companies doing business in Brazil have been burdened by managing multiple point solutions for continuous transaction controls (CTCs), tax […]

ShipCompliant United States
May 28, 2020
Ask Alex: Your Bev Alc Compliance Questions Answered (May 2020)

  Do you have questions about the rules, regulations, and compliance requirements of the beverage alcohol industry? This series, Ask Alex, is a perfect opportunity to get those pressing questions answered straight from one of the industry’s regulation and market experts, Alex Koral, Senior Regulation Counsel, Sovos ShipCompliant.  To take advantage of this opportunity and […]

E-Invoicing Compliance EMEA
May 28, 2020
Turkey’s Transition Conditions for E-ledger

On October 19, 2019, the Turkish Revenue Administration (TRA) published a communique making the e-ledger application mandatory for e-invoice users, companies subject to an independent audit, and companies identified by the Presidency to have poor tax compliance.  The e-ledger application enables businesses to create the legally mandated general journals and ledgers and submit e-ledger summary […]

ShipCompliant United States
May 27, 2020
How Technology Partnerships Improve DtC Compliance

To be an expert, one has a specialty. Ours is beverage alcohol compliance. Since compliance sits at the heart of operations, being connected at every step helps our customers focus on their business instead spending countless hours on manual processes. Compliance is challenging, but we make it easier with a large and robust network of […]

EMEA IPT Tax Compliance
May 26, 2020
Why IPT Reporting is so Complex for Insurers

Accurately calculating insurance premium tax (IPT) for reporting can be complex.  And the ramifications of getting it wrong can be far reaching from impacting profit margins to unwelcome audits, fines and damage to your company’s reputation in the market and with customers. Calculation methods When I speak to customers about how they calculate insurance premium […]

EMEA Tax Compliance VAT & Fiscal Reporting
May 26, 2020
The Future of VAT in Northern Ireland

As negotiations to determine the future relationship between the EU and UK beyond the end of the transition period resume, after a COVID-19 initiated pause, it’s worth taking a moment to review some of the anticipated VAT implications of Brexit, and in particular the impact on Northern Ireland. Prior to the UK leaving the EU, […]