Starbucks Has More Money Loaded in Mobile App And Cash Cards Than Many Banks Have In Deposits

Customers willingness to deposit their money with Starbucks rather than banks appears to be another example of disintermediation. People prefer to deal directly rather than through intermediaries, especially given the endless fees and low returns banks have provided. And given the growing importance of intangibles, maybe people just trust baristas more than bankers. JL

Tonya Garcia reports in Marketwatch:

Starbucks Corp. had $1.2 billion loaded onto Starbucks cards and the Starbucks mobile app as of the first quarter of 2016. 41% of Starbucks transactions in the U.S. and Canada were conducted using a Starbucks card.
Some people keep their money in banks. Some keep cash beneath a mattress. Now there’s another place that people are depositing their money: their Starbucks accounts.
The Wall Street Journal recently reviewed data from S&P Global Market Intelligence to determine where people are stashing their money these days, including banks, entities like PayPal Holdings Inc.   and other nonbanks.
Starbucks Corp. , for one, had $1.2 billion loaded onto Starbucks cards and the Starbucks mobile app as of the first quarter of 2016, according to the data. This money can be used to purchase items including drinks, food and other merchandise.

As of the second quarter of fiscal 2016, 41% of Starbucks transactions in the U.S. and Canada were conducted using a Starbucks card (24% of transactions at company-operated retail stores U.S. used the Starbucks mobile app), according to figures Starbucks provided to MarketWatch. The company had 12 million active loyalty members in the U.S. in the second quarter.

Starbucks sells millions of gift cards on Christmas Eve alone during the 2015 holiday shopping season.
The Starbucks figure exceeds the deposits at many actual financial institutions, including California Republic Bancorp ($1.01 billion), Mercantile Bank Corp. ($680 million) and Discover Financial Services ($470 million.