World's biggest bank in 2023: Starbucks?

Coffeedollar1Square. Square has invented a smooth, cheap, flexible virtual transaction system. Paypal works only online. Dollars work only offline or online through expensive credit card companies. Square instantly makes offline transactions into online ones, utilizing small-computer technology.Your smartphone talks to Square.

Starbucks. A coffee seller with 17,000 locations.They also have a customer loyalty program. Buy stuff, get Stars. You can spend your Stars in Starbucks or at their online store.

Square and Starbucks have struck a payments deal. As an astute analyst has pointed out, Starbucks can now use the Square system to extend the purchasing power of Stars. Square's technology doesn't see a difference between dollars and Stars, at least not natively. I suppose there will eventually be a regulation. But for now, there's no reason why Starbucks cannot issue Stars at will, and allow people to spend their Stars through Square on anything you can buy in Square. Which is, anything.

Square opens the doors for all loyalty credits to acquire general economic liquidity. There may be a first-mover advantage, in which case, Starbucks wins. Move over, Fed: Here comes coffee cash.


Comments on World's biggest bank in 2023: Starbucks?:

Richard Bartle says:

Aren't there already laws that prevent non-government organisations such as companies from issuing currency?

Posted Jan 23, 2013 3:13:24 AM | link

Edward Castronova says:

There are laws requiring that a person accept paper money issued by the government as a form of payment at the stated face value. There are also regulations on customer loyalty programs. But to my knowledge there are no laws defining a exactly what will be understood as a "private currency" and declaring that no one may issue it. It's thorny.

I imagine there's a substantial chilling effect. It's not clear how regulators and courts would react. Meanwhile, though, nothing has stopped Bitcoin and Yutils from operating freely. Liberty Reserve is a huge processing system. What's the line between a processing system and a currency? Where are the bright lines between Facebook's currency exchange system, Liberty Reserve, the Federal Reserve, and Starbucks/Square?

Posted Jan 23, 2013 9:36:23 AM | link

Andy Havens says:

Super. Now when they screw up my order and give me a credit for a free cappuccino I'll have to get a 1099-MISC to go with.

Posted Jan 23, 2013 9:55:13 AM | link

Stabs says:

I suspect that by 2023 enough of these made up virtual currencies will have gone boom that people will consider a private corporation's virtual currency about as stable as the Zaire was.

If these things aren't money then there's no consumer protection at all is there? I could sell you 1000 Stabsies for 1000 dollars then simply close or hyperinflate the currency and keep your money perfectly legally. Caveat emptor.

Posted Jan 23, 2013 7:53:08 PM | link

Tony Jones says:

Excuse me if I decline to have anything to do with an outfit that has 'struck a payments deal with Starbucks'.

Posted Jan 24, 2013 6:35:53 PM | link