Banks in disguise

[rogermunibond]

Really good post by Net Interest/Marc Rubenstein on Substack.

 

https://www.netinterest.co/p/banks-in-disguise

[brobro777]

Agree about SBUX - when I used to go to the office instead of working from home, I constantly loaded my Starbucks app with gift cards usually bought at discount. Add in the Stars rewards system and I used the app incessantly, meaning SBUX got to use cash for free and dedicated loyal use every single workday. And having money in the SBUX app probably led to my spending more in the store

 

Even though SBUX is UNCH since 2019 I think it can recover and be great again

 

 

[Hektor]

8 hours ago, rogermunibond said:

Really good post by Net Interest/Marc Rubenstein on Substack.

 

https://www.netinterest.co/p/banks-in-disguise

Good read. Thanks @rogermunibond

[ratiman]

I thought banks lend money? In none of these cases do the companies lend money. Instead they are lent money by customers. Borrowing money is very different from lending it. Negative working capital is great but it has nothing to do with being a bank.

[gfp]

"these companies also have float" wasn't a catchy title

[John Hjorth]

The way float is defined makes the inner workings of customer insurance deposits and its nature, mechanics, regulations etc. totally different while compared to ie. bank customer deposits.

 

It is generally about the fundamental properties of those - of the fundamental properties float is uncallable except in the case of the incurred damage or the loss to certain asset or assets owned by the insurance customer, where bank deposits in general stipulates and states a certain amount to be paid at any time, specified by the deposit contract with the bank customer.

[Saluki]

This is a powerful business model.  I noticed it in companies like Walmart (and now CPNG) that sell quickly and pay suppliers slowly and it gives you free float that you can use. As long as the business grows, so does the float. Some companies like Amazon and Apple (last time I checked) also have this, which makes it incredibly hard to compete with them since their cost of capital is negative (up to a certain amount). I didn't realize that SBUX had so much customer cash.  It's kind of BS that they get to keep it.  Banks and others have to turn abandoned money over to the state (escheatment) and the person can claim it or the state keeps it.  Seems shady that once you charge up your SBUX card you can only spend it or lose it.