First Data Bets on Virtual Gift Cards to Drive Local Commerce

Gift cards have been growing astronomically and now make up an industry nearing $100 billion in revenues. You’ll see racks of cards for national brands and retailers everywhere, from Safeway to Bed, Bath & Beyond.

But can local merchants get in the loop? We’ve seen gift card activity increase in travel, spa & salon and hospitality. Most of these are sold in person or on web sites.

And a second question: can they go virtual, with gift cards stored in e-wallets and easily bought, sold and transacted via mobile phone? While the industry is relatively nascent, Mercator Advisory Group says loads onto digital cards have tripled from 2012 to 2014.

That’s the bet that payment processing giant First Data is making today via the acquisition of Gyft, a Silicon Valley ewallet provider that has contracts with 200 major retailers.

First Data is hoping to extend its own prepaid ties with over 300 national retailers, while also working with SMBs who use its Clover touchscreen POS solution. Its Perka loyalty program customers may also be recruited.

Not everyone thinks they can easily move into Gift cards, however. Facebook, today, announced that it was shutting down its virtual gift card service – apparently, it sees other avenues for getting into ecommerce, such as buy buttons, as more immediate and customer-centric.

Perka co-founder Rob Bethge is a featured speaker at BIA/Kelsey’s Leading in Local: SMB Digital Marketing conference Sept. 22-24 in New Orleans. Check out the full agenda here. Prices go up after July 31.