because Starbucks is sitting on $2 billion of unused gift cards and they're earning interest from it.

because Starbucks is sitting on $2 billion of unused gift cards and they're earning interest from it. I keep getting comments in my videos about banks that Starbucks must also be one too. Let's talk about how gift cards actually work under the hood! When you purchase a gift card from a merchant or from Starbucks, they take the funds from you and they open an FBO account at a real bank. And then they also start to maintain an internal record of who gave them what so that they know when you run out of your gift card balance. And now you're probably like, what do you mean said they know? Can't they just go to the bank account and find out? Well, that's because an FBO account is just like a regular checking account except it's a pool of funds. So the account is earning interest. However, it is managed and created and tied to one person for the benefit of one or more people. So if you know any Nepo babies in your life or you've ever heard of trusts, that's exactly how they work. So when you go to Starbucks to spend your gift card, Starbucks will transfer those funds from the FBO account into their personal operating business account. I think the reason people think that Starbucks is a bank is because they are earning interest off of those funds. But you have to remember that what makes a bank is not the 4.75% interest that you and I get from our high yield savings account. What makes a bank a bank is that they can take those funds and they can lend it out to other people for 200x. So if Starbucks is earning the same 4.75% interest that you and I are getting, am I also a bank?