Airline frequent flyer programs aren’t the only ones going revenue based. A few weeks back we learned that My Starbucks Rewards is also going revenue based as of April 2016.
Presently Starbucks offers members rewards based on the number of transactions they make, rather than how much they spend. In other words, an order for a small cup of coffee accrues the same rewards as an order for a dozen venti frappuccinos.
Under the new system:
- You earn 2 stars per $1 spent (rather than one star per transaction)
- Gold status requires 300 stars (rather than 30 stars)
- You need 125 stars for a reward (rather than 12 stars)
In other words, you need to spend $150 to earn Gold status, and you need to spend $62.50 to get a reward. If your average receipt at Starbucks is more than ~$5.21, you’ll come out ahead under the new system.
While perhaps not directly linked, it seems like Starbucks is doing quite a bit to innovate the payment side of things.
Starbucks has just announced that they’ll be introducing a prepaid debit card later this year, which will be issued in conjunction with Chase. Per PaymentsSource:
Starbucks is prepared to launch a new Starbucks Rewards Prepaid Card with partner JPMorgan Chase, further strengthening its ongoing relationship with the bank.
The new card will be available to Starbucks customers at the end of this year, Kevin Johnson, the coffee chain’s president and chief operating officer, told attendees at the company’s March 23 shareholder meeting.
The reloadable prepaid card will allow customers to earn “stars” for all card purchases made anywhere Visa cards are accepted to apply toward Starbucks purchases.
It’ll be interesting to see what this looks like in practice, given that the prepaid card will also offer Starbucks’ rewards currency, “stars.” I assume it’ll offer fewer stars for everyday purchases than for Starbucks purchases, especially since Chase and Starbucks have limited ability to monetize this product (because merchant fees are capped on prepaid cards).
Regardless of the details, this isn’t a card I’d use for everyday spend, but there are definitely some circumstances under which it could make sense to use the card. For example, you can pay your taxes by debit card for a flat fee of as little as $2.50, so if you get anything in the way of rewards with a prepaid Starbucks card, that’s better than nothing.
For Starbucks it seems like this is just the beginning of them dabbling in this industry:
“This new model is just the beginning of Starbucks opening up its digital ecosystem as well as extending its payment platform,” Johnson said.
It’s surprising that Starbucks doesn’t have a co-branded credit card, given how popular they are. All kinds of other major businesses, from airlines to warehouse stores to high-end retailers have credit cards, so why shouldn’t Starbucks? I’m guessing that’s what’s coming next.
It’s exciting to see Starbucks partnering with Chase, and the potential this partnership holds. I’m guessing a prepaid card is just the beginning. There aren’t many prepaid cards out there which offer lucrative rewards, though it sounds like this one will offer something.
Long term it’ll be interesting to see if Starbucks introduces a co-branded credit card. While I doubt it will be all that rewarding for savvy consumers, I imagine it would have wide appeal.
What do you think of the new Starbucks prepaid card, and what do you expect the rewards structure to be like?