Mobile payments for gift cards

July 05, 2011

Retailers can make gift cards more attractive and confidence-building with mobile payments technology.

The spread of speedy mobile payment systems – at gas stations, convenience stores and nearly 9,000 domestic Starbucks outlets (including 1,000 in Safeway and 1,000 in Target) – got The Lempert Report thinking about a new mobile application that would be popular.

Gift cards could be made more secure, more popular, quicker, labor-efficient and even greener. Think of how iTunes diminished tapes and records; a mobile system could make gift card payments electronic and do away with plastic bearer cards. A mobile payment system would also encourage gift card purchases because:
•    Faster one-step purchase – Not the two-step buy and activate process needed today.
•    Universal access – The gift-card value could go into a bank for use, and be used at a store or restaurant of choice.
•    Less unredeemed value – Users can tap into their value wherever they are with their phones, so chances improve they’ll know the current value and use it up.
•    Gifts made more convenient – A buyer could e-mail the gift card to someone, who gains instant access.
•    More fun, more exciting to give as a gift and to receive – Make a gift more of an event. Don’t just transmit an e-mail; senders can surround the mobile gift card with a short video of them singing happy birthday or whatever the occasion.  

Retailers may no longer benefit unduly from the billions of dollars of untapped value in gift cards. They will, however, make gift cards more viable, more fulfilling experiences – and that’s a win-win in our view.