Starbucks may be the gold standard in coffee loyalty, but even its most dedicated fans aren’t exclusive—over half of Starbucks customers also visit competitors. The Starbucks Rewards program has built a devoted following, encouraging members to pre-fund their next purchases, amassing a staggering $1.5 billion in stored value. While Starbucks earns interest on these funds, a portion may never be redeemed — flowing straight to the bottom line.
But this model didn’t happen overnight. Starbucks spent nearly a decade refining its app and embedded payments. Fortunately, with today’s embedded finance solutions, coffee brands no longer need years of development to achieve a similar impact.
How coffee loyalty stands apart
Unlike other industries, coffee loyalty is driven by frequency, habit, and speed. Here’s how that shapes the program experience:
- Daily habits drive engagement. Coffee purchases are frequent — often daily — creating a prime opportunity to reinforce routine-based loyalty.
- Rewards must be instant and simple. While some independent cafés still rely on punch cards, larger chains use app-based rewards that offer immediate gratification and encourage repeat visits.
- Convenience is king. Many customers order via app even when in-store, not just to earn points but for one-tap reordering and tantalizing upsell suggestions.
- The prepaid model boosts spend. Starbucks incentivizes users to load funds into their app — often in amounts exceeding the price of a single drink — ensuring a cycle of ongoing purchases.
- Speed wins over discounts. Unlike other loyalty programs that emphasize savings, coffee loyalty thrives on efficiency — reducing friction and making every transaction seamless.
Brewing differentiation: The power of Loyalty Wallets
With mobile ordering and rewards now table stakes, loyalty wallets offer the next level of engagement and profitability.
- Loyalty Wallets – In its simplest form, wallets can store rewards and points within an app, making redemption seamless and encouraging customers to return for their next cup.
- Loyalty Wallets + Payments – Integrating payments into the wallet allows customers to pay directly, reducing checkout friction while creating new revenue opportunities for coffee brands.
- Loyalty Wallets + Branded debit card - Attaching a debit card with open-loop spending capabilities allows your customers to earn rewards for everyday spending, at the grocery, gas station, all while your company earns interchange with each transaction. Additional use also drives deeper customer engagement, a constant reminder of your always-appealing products.
Beyond credit cards: Smarter payment options for coffee brands
While most consumers link their wallet to a credit card, this method comes with interchange fees — a hidden cost for coffee brands operating on slim margins. Alternative funding options can boost both convenience and profitability.
Non-network payments (ACH & direct deposit): ACH transfers or direct deposits eliminate transaction fees entirely. Offering bonus rewards for non-network payments can drive adoption while reinvesting cost savings into customer incentives.
A fresh approach to coffee loyalty
In the race for the daily caffeine fix, standing out doesn’t have to mean sacrificing margin. By embedding a loyalty wallet into an existing app, coffee brands can deliver a frictionless payment experience, deepen customer engagement, and unlock new revenue streams—all while keeping customers coming back for their next cup.
