⚡ Quick Summary
Customer prepaid balances accumulated on Starbucks cards have reached 427.6 billion won, yet consumers can only receive a cash refund for the remaining balance after spending at least 60% of the last charged amount.
Starbucks generated around 40.8 billion won in profit by managing these funds through bank deposits and trusts, but no interest is paid to customers. Furthermore, because Starbucks is classified as a single merchant, it is not subject to supervision by financial authorities, unlike prepaid payment services such as Naver Pay.
Following a boycott controversy in May, widespread refund demands erupted, prompting the Fair Trade Commission to review the appropriateness of the 60% refund threshold, while Starbucks posted an operating loss of 18.4 billion won in that quarter.
Starbucks, which has been particularly controversial this year, holds 400 billion won in customer funds. This is not coffee revenue. It is money that customers pre-loaded onto their cards and apps and have not yet spent. Even though it is their money, they cannot freely get all of it back. Starbucks manages these funds to generate profit. The money has already left customer bank accounts, yet it has not bought any coffee. To whom does this 400 billion won really belong?
1. "I'm Not Going to Starbucks. Give Me My Money Back"
In May, after Starbucks faced public backlash over its Tank Day marketing campaign, a boycott movement began. Rather than simply stopping drinking Starbucks coffee, people sought to withdraw the money they had pre-loaded onto their cards and apps. However, even though it was their own money, they could not immediately receive a full refund. Customers who decided never to use Starbucks again had to spend money first in order to get their money back. Online posts even showed receipts proving that customers bought six bananas priced at 1,500 won each just to clear out a remaining balance of 9,000 won. They were forced to make unwanted purchases simply to receive a refund.
Person A | Yangcheon District, Seoul
When they said 60%, it felt like a joke. Wouldn't it be better if they just gave a full refund from the very beginning?
This is because, under Starbucks card terms and conditions, consumers can only receive a cash refund for the remaining balance after using at least 60% of the amount recorded at the last top-up. As the boycott spread, complaints about this rule mounted, and consumer advocacy groups demanded that the company unconditionally refund the full remaining balance. As the controversy escalated, Starbucks temporarily waived the 60% requirement for just two weeks, from June 1 to June 14, allowing full refunds of unused balances. Then, on June 15, it reinstated the 60% rule.
2. 427.6 Billion Won Left Unused
An examination of Starbucks' audit report reveals that, as of the end of last year, unspent customer prepaid balances stood at 427,563,110,000 won. That figure grew by nearly 32.5 billion won in just one year. Moreover, this 427.6 billion won is not the total amount charged by consumers over the course of last year, but rather the balance that remains unspent. Last year, newly generated prepaid recharges totaled 1.7497 trillion won, while used or refunded amounts totaled 1.7172 trillion won. Over 1.7 trillion won of customer money flowed into and out of Starbucks in a single year. Until customers purchase coffee, this money remains in the hands of Starbucks.
3. Gone from My Bank Account, but Not Starbucks' Revenue
When you load 50,000 won onto a Starbucks card, 50,000 won leaves your bank account. If you have not purchased a beverage yet, Starbucks has received cash without providing goods or services in return, meaning it cannot immediately record that 50,000 won as revenue. The company must provide 50,000 won worth of coffee or merchandise when the customer requests it in the future, which is why this money is recorded on the balance sheet as a liability under advances received.
The question of whether it is my money or Starbucks' money is somewhat complicated. The moment you reload your card, your cash transforms into a right to receive goods and services from Starbucks. Starbucks obtains cash while taking on an obligation to provide equivalent goods or services. What is interesting is what happens in between. Where does this cash sit after entering Starbucks and before turning into coffee?
4. Zero Won in Interest for Me, 40.8 Billion Won for Starbucks
According to data from the Financial Supervisory Service, Starbucks has managed customers' prepaid balances in bank deposits, trusts, and other financial products. From 2020 to August 2025, cumulative customer recharges exceeded 2.6 trillion won. The interest and investment returns Starbucks generated by managing these prepaid funds in deposits and trusts amounted to approximately 40.8 billion won. No interest is paid to customers. The fact that Starbucks earned 40.8 billion won is not an inherent legal violation, as customers did not deposit money to earn interest but rather paid in advance to purchase goods. Starbucks explained that funds managed outside the banking sector were invested in stable instruments, such as principal-guaranteed products. Those who paid the money cannot freely withdraw it in cash, while the company that received the money can manage it to generate profit. With more than 400 billion won involved, are these funds being supervised like those of a financial institution?
5. 50,000 Won in Naver Pay vs. 50,000 Won in Starbucks
When you load 50,000 won onto Naver Pay or Kakao Pay, the app displays a 50,000 won balance, just like Starbucks. However, funds that can be spent across multiple merchants, such as Naver Pay, are classified as electronic prepaid payment means under the Electronic Financial Transactions Act and fall under the supervision of financial authorities. In contrast, Starbucks balances can only be used at Starbucks. Because all stores are directly operated by headquarters and legally considered a single merchant, Starbucks is exempt from supervision under electronic prepaid payment regulations. Legally speaking, where the money can be spent is a more critical criterion than the size of the fund. Lawmaker Kang Min-kuk of the National Assembly's Political Affairs Committee pointed out that Starbucks generating over 40 billion won in profits from managing customer prepaid funds without undergoing Financial Supervisory Service supervision and examination amounts to leaving consumer assets neglected.
6. What Happens to My Money if Starbucks Faces Trouble?
What would happen to customer funds if Starbucks ran into trouble? Starbucks is enrolled in guarantee insurance in accordance with relevant laws. As of the end of last year, the guaranteed amount stood at around 402.5 billion won, covering about 94% of the 427.6 billion won in prepaid balances (*a protection method distinct from the depositor protection system). However, while prepaid payment instruments like Naver Pay are subject to financial regulations requiring segregated fund management and investment in safe assets, those rules do not apply to Starbucks' prepaid funds.
7. Why Must I Spend 60%
of My Own Money?
Returning to the initial question: why must you spend 60% of your pre-loaded money to get a refund? Under the Fair Trade Commission's Standard Terms and Conditions for New Types of Gift Certificates, which apply to reloadable amount-based certificates like Starbucks cards, businesses must return the remaining balance upon request only after consumers have used at least 60% of the face value (or 80% for amounts of 10,000 won or less). Department store gift certificates, culture vouchers, and prepaid cards from other coffee chains operate on similar standards. However, the FTC standard terms are recommended guidelines provided by the government, not mandatory laws that businesses are strictly required to follow.
8. Will an Old Rule Finally Change?
Why 60%? The rule requiring consumers to spend a certain threshold before receiving a balance refund dates back to the era of the now-repealed Gift Certificate Act. It was established to prevent illicit cash-out schemes, such as illegal discounting of vouchers, while balancing consumer protection. Even after the Gift Certificate Act was abolished in 1999, the 60% threshold remained in the FTC standard terms, and similar standards were later applied to mobile vouchers.
Joo Byung-ki | Chairperson, Fair Trade Commission (May 26, 2026)
If the 60% requirement is lowered too much, there is a risk of side effects, such as vouchers being abused for illegal cash-outs like credit card cashing...
The reasoning is that allowing unconditional 100% refunds in the name of protecting consumer funds could lead to vouchers being exploited as tools for generating cash. Yet that does not necessarily mean the current 60% requirement is appropriate.
Joo Byung-ki | Chairperson, Fair Trade Commission (May 26, 2026)
We are reviewing whether 60% is appropriate.
Following the Starbucks incident, the Fair Trade Commission began re-examining the existing standard. The issue revolves around two core factors: the demand for stronger consumer rights over prepaid funds, and the risk of vouchers being exploited for cash conversion if the refund barrier is set too low. Today, far more money is locked inside corporate apps than when prepaid cards and mobile vouchers first emerged. Is the legacy 60% refund threshold still appropriate for a 400-billion-won prepaid economy like Starbucks'? The Starbucks controversy has reignited this question.
9. Why Do Companies Collect Prepaid Funds First?
For customers, prepaid systems offer faster checkout, rewards, and auto-reload convenience. For businesses, funds are secured in advance, and customers are far more likely to return to spend their remaining balance. Securing cash upfront while locking future consumption into the company is known as the "lock-in effect." In May, this dynamic began working in reverse.
10. Two Months Later: An 18.4 Billion Won Deficit
Jeon Sang-jin | Head of Management, Shinsegae Group (May 26, 2026)
While this is not the moment to scrutinize sales figures, we are experiencing a very substantial decline in revenue.
Two months later, the first quarterly report following the refund controversy was released. Starbucks Korea recorded revenue of 747.3 billion won in the second quarter, down 6.1% year-on-year, while its operating profit swung from a 40.3 billion won surplus in the second quarter of last year to an operating loss of 18.4 billion won in the second quarter of this year. Starbucks cited factors such as not holding its summer Frequency promotional event in June as main reasons for the earnings decline. Because the scale of special refunds was not publicly disclosed, it is difficult to determine how much the refunds directly affected performance. While there is no definitive proof that the refund dispute alone caused the 18.4 billion won deficit, Starbucks' earnings deteriorated sharply in the exact quarter when boycott controversies and massive refund demands emerged.
11. The Question Posed by 400 Billion Won
From coffee prepaid cards and gift certificates to mobile gifticons and simple-payment balances, paying first and consuming later has become routine. Even when an app displays an identical "50,000 won balance," the nature of that money varies. Depending on where the funds are loaded, refund conditions, corporate fund management practices, and protections in times of trouble all differ. Tapping the "reload" button on an app may offer convenience, but it also transforms bank account cash into a right to purchase goods from a specific corporation. The money accumulated at Starbucks in this manner stands at 427.6 billion won. While companies can manage this cash in the meantime, consumers cannot convert the full amount back into cash whenever they wish.
The Starbucks situation has raised anew the question of whether applying a legacy 60% threshold from the old gift certificate era remains valid in today's multi-hundred-billion-won prepaid economy. To whom does the 400 billion won sitting inside a coffee company truly belong?
Deep Dive Q&A
Q1. Why is Starbucks exempt from direct supervision and examination by financial authorities despite earning over 40 billion won in profit from customer prepaid balances?
A1. Because Starbucks stores are legally considered a single merchant (all directly operated by headquarters), they are excluded from the scope of regulation for "prepaid electronic payment businesses" under the Electronic Financial Transactions Act. While balances that can be used across multiple merchants, such as Naver Pay or Kakao Pay, are subject to regulatory supervision, Starbucks balances can only be used at a single business entity and therefore do not require registration or regulation as a prepaid electronic payment business. Consequently, Starbucks was able to manage more than 2.6 trillion won in cumulative prepaid recharges in bank deposits and trusts between 2020 and August 2025, generating approximately 40.8 billion won in interest and investment returns. In response, lawmaker Kang Min-kuk of the National Assembly's Political Affairs Committee pointed out that allowing Starbucks to earn over 40 billion won by managing customer funds without undergoing Financial Supervisory Service supervision and examination amounts to leaving consumer assets neglected.
Q2. Why must I use at least 60% of my pre-loaded funds to receive a cash refund for the remaining balance?
A2. Because the Fair Trade Commission's "Standard Terms and Conditions for New Types of Gift Certificates" stipulate that remaining balances can be refunded only after at least 60% of the face value (or 80% for amounts of 10,000 won or less) has been spent. This rule dates back to the former Gift Certificate Act, designed to prevent illegal cash-out schemes like voucher discounting while balancing consumer protection. FTC Chairperson Joo Byung-ki also noted that allowing unconditional 100% refunds could lead to vouchers being exploited for illegal cash-outs. However, as public dissatisfaction grew over whether a legacy 60% rule remains suitable for a prepaid economy exceeding 400 billion won, the Fair Trade Commission has begun reviewing whether the threshold remains appropriate.
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