TikToker’s theory of how Starbucks is essentially a bank is going viral

A popular TikToker has explained why she thinks Starbucks is basically a bank, and her theory has gone viral on the platform.

The video breaking down the theory, posted by an account known as Index Ventures (@indexventures), garnered 1.7 million views on TikTok on Wednesday.

While Starbucks may seem like a regular cafe, it’s “secretly a bank,” the TikToker claims in the video. When people load money onto their Starbucks app, they’re essentially storing money in “Starbucks’ bank,” she continues.

The app held $1.5 billion in balances — more than some actual banks are storing in deposits — at the end of 2019, according to TikToker. But unlike a bank, money stored in “Starbucks Bank” can only be used to purchase Starbucks products.

“This is great for Starbucks in two ways,” says the TikToker. “One: Starbucks can use that money any way it wants, before it’s even used to buy coffee. So basically we’re giving a free loan to Starbucks. And two: they don’t have to follow any bank’s regulations, because you can’t make withdrawals like you would at a bank. »

To add to these benefits, about 10% of money stored in Starbucks apps will go unused, according to TikToker estimates. She claims it means free money for the coffee company.

Starbucks’ mobile payment platform has been so successful that many people consider the company to be more of a fintech company than a cafe, according to the TikToker. In 2018, Starbucks was reportedly the most used mobile payment app, even surpassing Apple Pay. A 2018 report from Retail Dive predicted that Starbucks would remain the most used mobile payment app through at least 2022.

Viewers had mixed opinions on the theory. Some said it was like any other gift card system.

“It’s literally the same as a gift card. And more unused gift cards than cash on the Starbucks app. Use common sense people,” a viewer commented on the video.

“pov: you have discovered the concept of gift cards,” wrote another viewer in a comment.

Another user said, “This is true for all gift cards issued by retail businesses.”

“What’s with the music?” someone else asked. “So weird to portray this as a deep conspiracy rather than a super-successful, but ultimately standard, gift card scheme.”

Other viewers have said that the Starbucks rewards system is too good not to use, whether or not you want to think of the app as a bank.

“Their rewards system is too good not to,” wrote one viewer.

Another commented, “That’s because you get 2 stars on Starbucks money instead of 1 for $1.”

The Daily Dot contacted Index Ventures via TikTok and Starbucks commentary.

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*First published: February 9, 2022, 3:26 p.m. CST

Cecile Lenzen

Cecilia Lenzen is a journalism student at the University of Texas at Arlington and a freelance reporter for the Daily Dot.

Cecile Lenzen