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

Asia Pacific E-Invoicing Compliance VAT & Fiscal Reporting
February 13, 2020
Vietnam Makes E-Invoicing Mandatory

Whilst Vietnam has allowed the issue of electronic invoices since 2011, this has not proved popular with domestic businesses.  This is mainly due to the lack of an efficient framework for commercial processes and the technical capabilities required to issue e-invoices compliantly. During the last decade, the Vietnamese government has developed a more robust legal […]

EMEA VAT & Fiscal Reporting
February 13, 2020
Hungary Amends VAT Act – Real-Time Reporting Affects All

The Hungarian Ministry of Finance had a productive end to the decade. As outlined in an earlier article, the MoF announced a package of measures and proposals as part of its Economic Action Plan for 2020.  The aim of the plan is to improve VAT compliance and reduce fraud.  A bill to amend the laws […]

ShipCompliant United States
February 13, 2020
The Evolution of a More Competitive DtC Market

When I joined Wines & Vines magazine in 2011, I received an in-depth introduction to the world of direct-to-consumer wine shipments through the magazine’s collaboration with ShipCompliant. Back then the channel still seemed new, relatively novel, and while sales were strong in a few key markets, the overall growth of the segment was hobbled by […]

EMEA Tax Compliance VAT & Fiscal Reporting
February 12, 2020
ECOFIN Speaks on EU VAT Reforms

Pivotal projects in the development of EU VAT The EU’s Economic and Financial Affairs Council (“ECOFIN”) issued a report in December. This followed its review of EU tax policies and developments since Finland took over Presidency of the Council of the European Union in July 2019.  In a previous article we summarised their status review […]

Asia Pacific E-Invoicing Compliance EMEA LATAM United States VAT & Fiscal Reporting
February 12, 2020
What Is Value-Added Tax, Anyway? Trends Report Excerpt

Value-added tax (VAT) does not exist in the United States, but American companies are increasingly having to deal with VAT mandates in Latin America, Europe and Asia. Seeking to make up a massive gap in revenues, tax administrations are mandating strict policies to digitize VAT collection. American companies that fail to comply could see their […]