The first section of the article is riddled with errors or misleading statements that it's hard to take the rest of it seriously.
>Starbucks holds nearly $2 billion of customers’ money in its rewards program. That’s more than the total deposits managed by 85 percent of chartered banks, making the coffee chain one of the biggest financial institutions in the country.
Only in the sense that the US has thousands of banks, most of which are tiny. According to https://www.mx.com/blog/biggest-us-banks-by-deposits/, there are 4462 banks in the US. Starbuck's "nearly 2 billion" makes them so small it's not even in the top 250. You'd really have to stretch the truth to call that "one of the biggest financial institutions".
>More Americans than ever are in debt to their nearby grocery store due to predatory “buy now, pay later” loans offered during checkout.
>And if you can’t pay your rent on time, it could soon become common for your apartment building owner to lend you the money, putting you in debt to your landlord.
As others have mentioned, the debt is issued by the BNPL provider, not the grocery store or landlord. The article makes no effort to argue how it's any different than credit cards.
Skimming the rest of the sections, it's unclear what author actually wants. The article starts off lamenting how high of a margin payments networks have, but then lambasts challengers for setting up networks try to disrupt them.
Well, that's hyperbolic (and shares something with journalism that reports things in useless but colorful units like "massive as a dozen bull elephants"), but if we sidestep the question of how Starbucks compares to small banks, it does seem pretty impressive that they're holding $2B USD worth of stored value cardholders' money? NYT reports 25% of US consumers use BNPL to buy groceries[1] which seems worrying.
> This only exists if you are using delivery services like instacart.
This is incorrect.
When you use the Klarna app at checkout in person at actual physical stores on your phone you can definitely do this in person. Tons of people use their phones to pay for all the things these days.
My partner convinced me to use the Starbucks app for incentives. Unsurprisingly within months, the company doubled the points requirements for all rewards. I now have a dollar and change held hostage on it, but refuse to keep topping it up. I imagine there are many people in my situation.
Once upon a time, 1 pence was one point (I don't recall which supermarket). Now you get 2 Nectar points per pound. I do remember my parents grumbling when it went to 1 point per two pence.
The supermarkets have gotten wise to people realising points and vouchers are scams that almost never pay out substantially and have instead started punishment pricing for people who don't opt into data collection, sorry, loyalty cards.
I might be using a dead person's account at several grocery stores. I just never updated the phone number I used, who knows what bucket my purchasing data goes into. But I hope it causes some inconsistency somewhere.
>The supermarkets have gotten wise to people realising points and vouchers are scams that almost never pay out substantially for loyalty
It's called a "loyalty" program but there was hardly any "loyalty" to begin with. The points basically translate into a discount of <1%, and you get them whether you hop between stores for the best deal, or only shop at their place. The best way of thinking of them is a price discrimination scheme to rope in price-conscious shoppers.
>and have instead started punishment pricing for people who don't opt into data collection, sorry, loyalty cards.
I often think of them as a tax on people who don't want to carefully tailor their shopping to line up with shifting "deals" across supermarket chains and over time and those who don't have enough storage-times-consumption to benefit from buy-n-get-one-free on kilo packs of margarine.
I don't think they are identical as such, because my impression is that points would not routinely exceed 5% of your overall shopping unless you got lucky or shopped very carefully, but these days "savings" from avoiding the punishment price regularly accounts for 5-10 pounds out of 100 pounds of shopping. Though maybe more people use the cards now to avoid it so it does average out.
>Unsurprisingly within months, the company doubled the points requirements for all rewards.
Surely that was a coincidence? The most I could find was grumblings about the program changing back in 2019[1], but so far as I can tell it stayed the same since then. I agree points devaluations are bad, but people aren't storing their life savings in them, and the "cost" of those points are basically zero, so I'm not sure what the hand-wringing over them is about.
One more step in the long road forecast by the prophet Stross to singularity via deconstructing the solar system for computronium in which to run financial transactions.
The first section of the article is riddled with errors or misleading statements that it's hard to take the rest of it seriously.
>Starbucks holds nearly $2 billion of customers’ money in its rewards program. That’s more than the total deposits managed by 85 percent of chartered banks, making the coffee chain one of the biggest financial institutions in the country.
Only in the sense that the US has thousands of banks, most of which are tiny. According to https://www.mx.com/blog/biggest-us-banks-by-deposits/, there are 4462 banks in the US. Starbuck's "nearly 2 billion" makes them so small it's not even in the top 250. You'd really have to stretch the truth to call that "one of the biggest financial institutions".
>More Americans than ever are in debt to their nearby grocery store due to predatory “buy now, pay later” loans offered during checkout.
>And if you can’t pay your rent on time, it could soon become common for your apartment building owner to lend you the money, putting you in debt to your landlord.
As others have mentioned, the debt is issued by the BNPL provider, not the grocery store or landlord. The article makes no effort to argue how it's any different than credit cards.
Skimming the rest of the sections, it's unclear what author actually wants. The article starts off lamenting how high of a margin payments networks have, but then lambasts challengers for setting up networks try to disrupt them.
Well, that's hyperbolic (and shares something with journalism that reports things in useless but colorful units like "massive as a dozen bull elephants"), but if we sidestep the question of how Starbucks compares to small banks, it does seem pretty impressive that they're holding $2B USD worth of stored value cardholders' money? NYT reports 25% of US consumers use BNPL to buy groceries[1] which seems worrying.
1: https://www.nytimes.com/2025/06/02/business/buy-now-pay-late...
> More Americans than ever are in debt to their nearby grocery store due to predatory “buy now, pay later” loans offered during checkout.
I've seen this when checking out online, but never in my local grocery stores.
This only exists if you are using delivery services like instacart.
Which suggests a wild scenario that people can't afford groceries but are using a luxury service to buy and deliver them.
"It was the best of times - it was the worst of times"
> This only exists if you are using delivery services like instacart.
This is incorrect.
When you use the Klarna app at checkout in person at actual physical stores on your phone you can definitely do this in person. Tons of people use their phones to pay for all the things these days.
Typically you'd also be in debt to the BNPL provider, not the merchant.
Is that predatory? Can't you just decline the offer?
I have seen that on Walmart self checkout machines here in Canada.
With high treasury yields, earning money on held cash is a big business. Starbucks' $2b of rewards holdings makes them ~$100M / yr!
My partner convinced me to use the Starbucks app for incentives. Unsurprisingly within months, the company doubled the points requirements for all rewards. I now have a dollar and change held hostage on it, but refuse to keep topping it up. I imagine there are many people in my situation.
Once upon a time, 1 pence was one point (I don't recall which supermarket). Now you get 2 Nectar points per pound. I do remember my parents grumbling when it went to 1 point per two pence.
The supermarkets have gotten wise to people realising points and vouchers are scams that almost never pay out substantially and have instead started punishment pricing for people who don't opt into data collection, sorry, loyalty cards.
I might be using a dead person's account at several grocery stores. I just never updated the phone number I used, who knows what bucket my purchasing data goes into. But I hope it causes some inconsistency somewhere.
>The supermarkets have gotten wise to people realising points and vouchers are scams that almost never pay out substantially for loyalty
It's called a "loyalty" program but there was hardly any "loyalty" to begin with. The points basically translate into a discount of <1%, and you get them whether you hop between stores for the best deal, or only shop at their place. The best way of thinking of them is a price discrimination scheme to rope in price-conscious shoppers.
>and have instead started punishment pricing for people who don't opt into data collection, sorry, loyalty cards.
From a numeric perspective the two are identical.
I often think of them as a tax on people who don't want to carefully tailor their shopping to line up with shifting "deals" across supermarket chains and over time and those who don't have enough storage-times-consumption to benefit from buy-n-get-one-free on kilo packs of margarine.
I don't think they are identical as such, because my impression is that points would not routinely exceed 5% of your overall shopping unless you got lucky or shopped very carefully, but these days "savings" from avoiding the punishment price regularly accounts for 5-10 pounds out of 100 pounds of shopping. Though maybe more people use the cards now to avoid it so it does average out.
>Unsurprisingly within months, the company doubled the points requirements for all rewards.
Surely that was a coincidence? The most I could find was grumblings about the program changing back in 2019[1], but so far as I can tell it stayed the same since then. I agree points devaluations are bad, but people aren't storing their life savings in them, and the "cost" of those points are basically zero, so I'm not sure what the hand-wringing over them is about.
[1] https://www.areweadultsyet.com/2019/03/19/maximizing-the-new...
One more step in the long road forecast by the prophet Stross to singularity via deconstructing the solar system for computronium in which to run financial transactions.
I'm just not seeing the materials science advances necessary for it to work.