Next time you grab your morning coffee from Starbucks, you might be getting an NFT with it (if you live in the US). Web3 has arrived in coffee houses!
In collaboration with Ethereum sidechain Polygon (MATIC), Starbucks (NASDAQ: SBUX) have dropped a new Web3 rewards program that will allow its customers and employees to earn, buy and trade premium digital collectibles.
The Starbucks ‘Odyssey Program’ is set to launch later this year and will serve as an extension of the existing Starbucks Rewards program.
As customers make continued purchases, and complete activities in the app, they will be given rewards that can be accessed through the NFTs, which Odyssey refers to as ‘stamps’. The rewards include a wide range of prizes, from exclusive merch to a trip to the Starbucks coffee farm in Costa Rica.
According to Starbucks, no crypto wallet is required on the user’s side, which may streamline the onboarding process and user experience. However, it does raise some questions around the ownership rights of customers’ digital assets.
While the Starbucks NFTs will be built on the environmentally friendly Polygon Network, the Starbucks Odyssey platform itself will be powered by NFT marketplace Nifty Gateway, known for hosting collections from OG NFT artists such as Beeple.
The little-known brilliance of Starbucks rewards
Now, for those of you reading this and thinking “why the big deal?”, the Starbucks Rewards program is actually one of the most innovative financial products in the fintech space.
It began as just another typical marketing strategy that incentivised customers to buy more coffee. However, through a mix of nifty financial strategies, the program gradually evolved to earn Starbucks the label of “one of the most successful banks in America”, according to finance commentator Alex Johnson.
Because the program operates through people loading digital cash onto the Starbucks app, the program saw the coffee franchise secure more than US$1.6 billion in customer deposits last year alone. This is more than double the total customer deposits of Discover, the fourth largest credit card provider in the US.
Having access to this enormous line of credit allows Starbucks to “be its own bank” and sidestep many of the hurdles that come from banking with traditional financial institutions.
According to Johnson, Starbucks Rewards is responsible for roughly 53% of spend across all of their stores, making it the most successful customer incentive scheme in the country. It will be extremely interesting to see how the coffee chain utilises Web3 technology and the Polygon network to add increasing utility to its surprisingly wily rewards program.
At the time of writing Polygon (MATIC) is up 4% following the announcement and is changing hands for US$0.93, according to data from TradingView.