How Starbucks borrows money from its customers at a negative 10% interest rate

This essay from Moneyness by JP Koning is from 2019, but I just came across it. It's about Starbucks stored value accounts, which come in the form of physical cards but also as smartphone and smartwatch apps. In 2019 customers were holding about $1.6 billion in stored value.

It amounts to ~6% of all of the company's liabilities.

This is a pretty incredible number. Stored value card liabilities are the money that you, oh loyal Starbucks customer, use to buy coffee. What you might not realize is that these balances simultaneously function as a loan to Starbucks. Starbucks doesn't pay any interest on balances held in the Starbucks app or gift cards. You, the loyal customer, are providing the company with free debt.

But there's more. As I pointed out in the following tweet, don't forget breakage. Bond and note holders are pros. They don't forget about debts. But customers aren't so exact. They are sloppy, or busy, or forgetful, which means that many gift cards and balances will go unspent: