Incredibly more people are using Starbucks mobile payments app than Apple or Google.

Starbucks is currently sitting on over $1.6 billion of its customers' cash (who themselves earn no interest, only a promise to be sold a cup of coffee). This means that Starbucks can use this cash to help finance its day to day operations and, given that the average cost of borrowing for Starbuck is 4.75%, this equates to $74 million of extra profits. On top of this, every year Starbucks recognizes that a portion of its pre-paid card value will be permanently lost. In 2018, the company wrote back 10% of its stored value balances which was worth $155 million, up from $60 million in 2016. Therefore, $155 million from right-back of prepaid cards and $74 million from interest rate savings, add up to an approximately 5% additional of profit (or $229 million), as a result of its customers not using cash.

If Starbucks were to issue its Digital Currency - ‘Starcoin’ - to encourage more people to use another form of prepaid payment method (say by being able to use a Starcoin in other retail outlets), then potentially it could help to boosts its profits even higher. 

There is also increasing pressure from retailers not to use cash as it has to be stored, guarded and accounted for. Cash is expensive to transport and is inherently insecure, with over $40 billion a year being lost just by U.S. retail businesses, due to theft. There are signs that cash is being used less and less in the USA. In 2017, even for a $10 to $24.99 purchase range, cash was replaced by debit cards. Furthermore, by getting customers to use a digital form of payment, it is possible to gather spending data (which in itself is very valuable) and can be monetised - as we have seen the likes of Facebook and Google do with much aplomb.

Indeed it is argued that data is now more valuable than oil. So maybe other retailers need to ‘wake up and smell the coffee’ and see how they can profit from digital currencies.