First Data Buys Mobile Gyft
Transaction processor acquires gift-card, digital prepaid for mobile wallets
ATLANTA --In a move that puts a formidable transaction processor into the space of mobile gifting, First Data has acquired Gyft Inc., a digital platform focused on mobile wallets for gift cards.
For convenience store and other retailers following the trend of sending gift cards via mobile phones, transaction providers appear to be positioning themselves to be part of that developing support infrastructure.
First Data officials cited the need to provide consumers with "spending flexibility" as part of its decision to buy Gyft, a San Francisco-based startup that entered the gift-card market in 2012. In a short time, Gyft gathered more than 200 card-issuing retailers, developing a digital platform that enables consumers to buy, send, manage and redeem gift cards using mobile devices.
The transaction is expected to close next month pending Gyft shareholders approval. The companies did not disclose the financial terms.
Essentially, Gyft is a mobile wallet accessible by website and as a free app on iPhone and Android devices. With this acquisition, First Data's clients, including its more than 300 national retail prepaid clients, will have access to this growing distribution channel to adopt the next level of gifting, expand their gift-card footprint and programs and add choice for consumers.
In addition, First Data will bring these new tools to small-business owners who have adopted its First Data "Clover Station," which is a touchscreen point-of-sale (POS) solution. Gyft for this segment will be added to the Clover App Marketplace.
Virtual and mobile cards are gaining share rapidly in the nearly $100 billion U.S. gift card market, according to First Data officials. On average, loads onto digital cards tripled from 2012 to 2013, the company said, citing Maynard, Mass.-based Mercator Advisory Group's annual survey of retailers. First Data's own research shows that electronic gift-card sales grew 71% from 2012 to 2013.
"Retailers need to begin tapping into digital distribution channels to be responsive to early-adopter customers and stay competitive for the long term," said Ben Jackson, director of Mercator's prepaid advisory service.
"Gyft, with its mobile-gifting platform, and First Data, with its global scale and distribution network, together will accelerate the growth of virtual prepaid with powerful new tools for merchants of all sizes to deepen their relationships with their customers," said Guy Chiarello, president of First Data, Atlanta. "The same robust toolset deployed by big-box retailers will be coming soon to small- to mid-sized businesses."
"We are joining First Data to accelerate our growth and significantly improve the gift-card experience for both customers and retailers," said Vinny Lingham, co-founder and CEO of Gyft. "As a part of First Data's suite of innovation-powered products, Gyft will be added to a portfolio of technology-driven gift solutions that link advanced consumer-engagement technology with point-of-sale business solutions."
For retailers, data analytics and management tools enable those with gift cards to send targeted, cost-effective, flexible campaigns directly to new demographic groups, opening new markets that were previously difficult to access accessible, said First Data officials.
Gyft's social media platforms offer retailers customer interaction and real-time promotions that will drive revenue, encourage social sharing and build brand awareness, First Data officials said. Additionally, Gyft operates as an engine for bulk gift-card sales that employers and businesses can use for incentive marketing and promotions.
First Data provides secure payment transactions for merchants, financial institutions and their customers.
For more on the issue of digital gift cards, see the report in the June issue of CSP magazine.