Starbucks to Roll Out Prepaid Card to Boost Rewards Program

Starbucks Prepaid Visa Card

Starbucks Corporation (NASDAQ:SBUX) is planning to roll out prepaid card through Chase by the end of the year to expand its loyalty rewards program.

According to the specialty coffee roaster and retailer, consumers could use the prepaid card in any establishment that accepts Visa. Starbucks has been implementing different ways for consumers to earn rewards outside its cafes and convince them to participate in its loyalty program.

The coffee company recently signed a digital deal with The New York Times to allow its loyalty program members to read stories for free on its mobile app and earn points through paid subscriptions with the newspaper.  It also inked similar deals with Spotify and Lyft, which allows people to earn points to use in Starbucks Rewards program.

Starbucks’ loyalty program currently has more than 12 million active members in the United States. The coffee company noted that its loyalty program members seemed to have increased their spending on its products.

Starbucks Chief Operating Officer Kevin Johnson said they would announce the rate of rewards for the prepaid card at a later date

The coffee company revamped its rewards program last month and starting on April 12; consumers will earn two stars for every dollar spend on Starbucks products, and they would get a free beverage or food item after collecting 125 stars.  Consumers previously earned a star for every visit and received a free beverage or food item after earning 12 stars.

No monthly service fees on Starbucks prepaid card

According to a Chase representative, the Starbucks prepaid card will not have monthly service or reloading fees. However, consumers will be charged a $5 fee for a rush card replacement, a 3% 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 due to a legal action.

Chase did not reveal the terms of its agreement with Starbucks on the prepaid cards, but the bank said it has a bigger strategic partnership with the coffee company.

Greg McBride, chief financial analyst for, commented that prepaid cards have various fees in the past, but “changed dramatically” to provide better service to consumers.

He noted that people without banks accounts remained as the largest market for the prepaid cards. He added that some families also use prepaid cards to control their spending during vacations, and parents give it to their children.