Friday, February 11, 2011

Gift Cards Are Going Digital

By David Stone, Founder and CEO, CashStar
The Digital Age has arrived. Consumers by the tens of millions are now interacting, transacting and experiencing digitally unlike ever before.

Facebook now has well over 500 million users; eBooks are more popular than printed ones; 80% of U.S. adults regularly use the Internet for more than four hours a day; and smartphone penetration is at nearly 40% of the U.S. population.

What does this mean for gift cards?

  • Consumers want and will be able to buy their cards anywhere, anytime, from the most convenient and cost-effective channel.
  • Personalization is moving to a whole new level, which will enable more gifting opportunities. In the digital world, the ability for consumers to express themselves increases dramatically.
Retailers are quickly realizing this opportunity.

At CashStar, we have seen such retail clients as The Home Depot, The Gap, CVS/pharmacy, Starbucks, Chili’s, Williams-Sonoma and others embrace these new channels; they have rolled out some of the most innovative gift card programs in the market and we’re proud to have been part of that.

Here are a few predictions for how the Digital Age will affect gifting:
  1. Instant Communication: The email channel will grow and become a primary means of sending and distributing gift cards. Speed, convenience and cost will drive the transition from plastic to digital.
  2. Social Gifting: We have all heard the buzz about “Facebook Commerce.” As consumers become more comfortable socializing and communicating through social networks, this channel will continue to grow in importance for retailers: first as an engagement tool, primarily, and then as a commerce channel as well. Retailers who have active, engaged Facebook fans will witness the most growth for their digital gift cards. Smart retailers will also utilize the social channel as a means of acquiring customers and deepening relationships. “Social gifts” and incentives are valuable tools in this milieu.
  3. Mobile Gifting: Mobile is an emerging channel that will develop as smartphone penetration increases and retailers begin the process of enabling point-of-sale redemption. Retailers will want to make sure their customers’ mobile purchases – and the recipients’ experiences, especially – are as friction free as possible. So retailers: build or partner wisely.
  4. A richer gifting experience: In the digital world the customer experience becomes king. Simply offering a “plastic-like” alternative or a message with a “code” will not impress the savvy, discerning digital consumer. They will want digital personalization options and a friendlier, easier user experience.
I welcome your thoughts, and I hope to have further discussions with each of you next month in Orlando.

Thanks, David

Editor’s note: David Stone will chair a session focused on innovations in prepaid with executives from The Home Depot, The Gap, Nokia Mobile Financial Services and Rev Worldwide at IIR’s Prepaid Expo USA March 6-9 in Orlando, FL – the world’s largest gathering of prepaid industry professionals in both closed- and open-loop markets.
For more information or to register, please visit

David Douglas Stone is co-founder and CEO of CashStar, the digital gifting and incentives company. He has more than 20 years of executive management experience in Fortune 500 and emerging growth technology companies with a strong emphasis on innovative payment systems and loyalty solutions.

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1 comment:

Unknown said...

I'm curious as to the profitability of prepaid gift cards. Are they just a means of encouraging consumers to shop or is their a significant amount of money that expires unspent? As the popularity of gift cards increases do you think that we will see new companies sprout up around these products or do you think that it will be dominated by individual retailers and the already established credit companies?