After the Christmas furor has died down, it’s inevitable – you collected a deluge of gift cards that you were excited about when you first got them. But come January, they’re lying in the bottom of a drawer, never seeing the light of day and never getting spent.
It’s a common enough problem – this year, U.S. consumers are expected to lose out on just over $1 billion in unspent gift cards, according to estimates from the CEB TowerGroup. While that seems like a small number next to the $118 billion spent on gift cards and certificates over the course of the year, that’s still a hefty amount of money squandered.
To give customers more convenient access to their cards, last week Moneris Solutions Corporation announced it was making its gift and loyalty program compatible with Apple’s Passbook, a virtual wallet for consumers to store their airplane tickets, movie tickets, and gift cards. Consumers can open Passbook when they’re visiting a store’s cash desk to pay for a purchase. The merchant will then key in or scan the gift card number as payment, and the card’s account balance will instantly update on Passbook.
The idea is to save consumers some grief over the holidays – and to encourage merchants to invest in mobile payments to serve their customers better, says Jeff Guthrie, Moneris’ chief sales and marketing officer.
“One of the things we can all relate to in the gift business is you get the gift card, and it’s great to get this beautiful gift card, and then you end up in the store and you realize you don’t have the gift card on you,” he says.
“So when we looked at that, and one of the things we talked about is, well, you know what? We all have phones. So the next step in that was virtualizing the card … What we wanted to do is to take these plastic gift cards and virtualize them.”
Consumers can go to a participating merchant’s website and buy a virtual gift card to email to someone. They can also buy a physical gift card from a brick-and-mortar store and then turn it into a virtual gift card on the merchant’s site.
Gift card recipients can spend the amount on the card any way they want – either through the Passbook on their iPhone, or by using the plastic card. The amount spent will sync together.
So far, Moneris has rolled out the program in pilot mode, with Kernels Popcorn starting the program last month.
The integration with Passbook is now expanding and is aimed at medium and large-sized businesses for the moment, but Guthrie says the plan is to roll it out to smaller merchants in the New Year. He adds he anticipates small businesses using both plastic and virtual gift cards in the near future.
“We needed to launch it a merchant where we had the scale to try it out. Our plan in 2014 is to bring it down to our complete range of small business gift card offerings, and loyalty offerings,” he says.
“What we’re seeing is a demand for virtual cards moving downward. There was a time when in the smaller market, we were seeing demand for plastic … one of the things we see is virtual cards coming into the small business market. That’s where it really gets interesting, if I can get it for my local hair salon or favourite restaurant, where I can have it, and it’s easy.”
Guthrie adds he expects programs like these to boost mobile payments among merchants, many of which have been hanging back and waiting to see if they will catch on among consumers first.
Still, there are definitely benefits for merchants providing mobile payments to consumers, he says. For example, it allows them to run promotions, loyalty programs, and ensure their customers will keep coming back.
Fee arrangements are established based on individual merchant agreements, according to Moneris.