Starbucks CEO Howard Schultz holds one of the company’s red holiday cups as he speaks Wednesday at the company’s annual shareholders meeting in Seattle.

Starbucks CEO Howard Schultz holds one of the company’s red holiday cups as he speaks Wednesday at the company’s annual shareholders meeting in Seattle.

Starbucks to offer prepaid cards to boost rewards program

NEW YORK — Starbucks says it will introduce a prepaid card by the end of the year that lets people earn points for its rewards program.

The Seattle-based company plans to offer the card through Chase and says people would be able to use it wherever Visa is accepted.

It’s the latest move by Starbucks Corp. to convince people to sign up for its loyalty program by giving them more ways to earn rewards “stars” outside of its cafes. The company also previously announced deals that entail selling its stars to The New York Times, Spotify and Lyft. Those companies would then distribute the stars as incentives to their own customers, Starbucks has said.

Starbucks said Wednesday it already has more than 12 million active members for its loyalty program in the U.S., and that people who sign up tend to spend more.

Last month, Starbucks announced an overhaul of its rewards program that hinted at plans to further expand the universe for its stars. Previously, people earned a star for each visit, and got a free drink or food item after 12 visits. Starting April 12, people will earn two stars for every dollar they spend, and get a free drink or food item after earning 125 stars.

By diminishing the unit value of a star, Starbucks Chief Strategy Officer Matthew Ryan has said the company would have more flexibility to award stars for “very small transactions.”

Kevin Johnson, chief operating officer for Starbucks, said people would not earn stars on the company’s prepaid card at the same rate that they do for purchases at cafes. He said the rate of rewards for the prepaid card would be announced at a later date.

A representative for Chase said the Starbucks prepaid card will not have a monthly service or reloading fee that often come with prepaid cards. Chase said the card will have just three fees; a $5 fee for a rush card replacement, a 3 percent foreign transaction fee, and a $75 legal processing fee, which would be triggered if the bank was required to hold or pay out funds from the account as a result of a legal action.

Chase declined to disclose the terms of its financial arrangement with Starbucks for the prepaid card, but noted it has a “larger strategic partnership” with the coffee chain.

Greg McBride, chief financial analyst for Bankrate.com, said prepaid cards have been known in the past for having a variety of fees, but that the landscape has “changed dramatically for the better” for consumers. He said the biggest market for the cards is still people without bank accounts, but that families also use prepaid card as a way to control spending on vacations, or to give to their children.

Talk to us

More in Herald Business Journal

Think Tank Cowork in Everett, Washington on July 19, 2022. (Kevin Clark / The Herald)
The first co-working space opens in downtown Everett

Think Tank Cowork’s owner hopes the facility will inspire other business owners to call Everett home.

New LGI Homes on Thursday, May 12, 2022 in Sultan, Washington. (Olivia Vanni / The Herald)
The real estate market took an abrupt turn this spring

Mortgage rates are up, but home inspections, seller concessions are back on the table for buyers.

The Lab@Arlington is a new one-stop shop for entrepreneurs and inventors located at 404 N. Olympic Ave. (Photo credit: TheLab@Arlington)
New Arlington business incubator opens

TheLab@Arlington is a new one-stop shop for entrepreneurs, inventors and business owners.

Patrons view the 787 exhibition Thursday morning at the Boeing Future of Flight Musuem at Paine Field on October 8, 2020. (Kevin Clark / The Herald)
Paine Field was county’s No. 1 tourist attraction. Not now

Snohomish County officials hope festivals and outdoor activities will fill Paine Field tourist gap.

Logo for news use featuring the municipality of Stanwood in Snohomish County, Washington. 220118
Stanwood Chamber of Commerce ‘can’t keep the doors open’

The chamber is set to shut down at the end of the month due to financial challenges.

Maria Rios, a ferry worker of 13 years, helps Frank and Fran Butler, both of Washington, D.C., check out as the couple purchases food on Thursday, July 21, 2022, aboard the MV Suquamish ferry between Mukilteo and Clinton, Washington. Rios said food service returned to the Suquamish about three weeks prior. (Ryan Berry / The Herald)
Drink up! Happy hour on the Mukilteo-Clinton ferry is back

More galleys are reopening as pandemic restrictions scale back. Get out of your car for concessions just like at the ballpark.

OnTrac Logistics has leased a building now under construction at Bay Wood Business Park on Everett's waterfront. The shipping company will open a facility there later this year that will employ 400 people. (Artist Rendering/Broderick Group.)
New Everett shipping facility to generate 400 jobs

OnTrac Logistics has leased a new building on the 12½-acre Baywood Business Park on Everett’s waterfront.

The Flying Heritage & Combat Armor Museum at Paine Field in Everett. (Janice Podsada / The Herald) 20220419
Flying Heritage Museum to reopen with new owner at Paine Field

Walmart heir Steuart Walton bought the historic aircraft and artifacts. The museum is set to reopen within the year.

Renee's Contemporary Clothing store at 2820 Colby Ave. on July 11, 2022. The iconic downtown Everett store is closing in August after 29 years in business. (Janice Podsada/The Herald)
Renee’s, another iconic downtown Everett store, is closing

After 29 years in business, the longstanding clothing shop will shutter. In-person sales slowed when stores reopened.

FILE - The logo for Boeing appears on a screen above a trading post on the floor of the New York Stock Exchange, Tuesday, July 13, 2021. Boeing is reporting a money-losing quarter as both its civilian-airplane division and the defense business are struggling. Boeing said Wednesday, April 27, 2022,  that it lost $1.24 billion in the first quarter and took large write-downs for several programs.  (AP Photo/Richard Drew, file)
Boeing sees best month for aircraft deliveries since 2019

The company delivered 51 passenger and cargo planes in June, its best month for deliveries in recent years.

The Alderwood Towne Center, a 105,000 square-foot strip mall, is located at 3105-3225 Alderwood Mall Blvd. The mall, which has been sold, is home to 20 businesses, including anchor tenants Marshalls and Michaels. Photo Credit: CBRE Group.
Lynnwood strip mall near Link Light Rail Station sold

Alderwood Towne Center, home to 20 businesses, could eventually be redeveloped to take advantage of light rail.

James Berntson shows how his farm uses a trellis system to control tomato plants on Tuesday, June 21, 2022, at Radicle Roots Farm in Snohomish, Washington. (Ryan Berry / The Herald)
Backyard business: Snohomish farm thrives on less than one acre.

James Berntson grew Radicle Roots Farm using smart crop planning and organic practices.