Gyft Gives Smartphone Users a Mobile Management Tool for Gift Cards

by Ben Jackson 0

Editor’s note:This isthe first in a series of Perspectives from Prepaid Senior AnalystBen Jackson testing different prepaid mobileapplications.

Start-up company Gyft is betting the smartphone can make gift cardsmore valuable for retailers and cardholders. Its business is basedaround an application that enables smartphone owners to buy, send,receive, store, redeem, and even re-gift cards. The company alsorecently announced it will acceptbitcoins to provide a way for bitcoin users to buy gift cards sothat closed-loop cards can serve as a bridge between bitcoin andoffline merchants.

In addition to its product for individuals, San Francisco-basedGyft also offers retailers a service that will let them push cardsout to customers. For third-party loyalty and incentive managers,it can provide a system to convert points into gift cards.

A Gyft user can upload a plastic card to the Gyft app by typing inthe card number, and the company is planning offer the ability toload a card by taking a photo of it.

In testing Gyft, I discovered that one of the perils to uploadinga card into a mobile app is bad typing. After loading a card, Itook it to the store to try to redeem it. While the Gyft appproduces a bar code that can be scanned, when I tried to redeem thecard, the clerk told me that that the scanner did not work. Itwasn’t entirely clear to me whether it was that scanner or aproblem with reading apps from a smartphone. (Though, I am toldthat in general enough dirty smartphone screens can frustrateclerks enough that they will default to typing in card numbersevery time any mobile application is presented.)

When the clerk tried to type in the card number, she couldn’t getthe terminal to accept it. At first I thought maybe the app hadgone wonky. She called over a manager who tried several times toget the number to be accepted, but that still failed. When shementioned that the card number might not be right, we found ourproblem. I had the plastic card with me and we compared the numberon the card to what I typed into the app. A classic case of usererror reared its ugly head.

I contacted Gyft’s customer service to tell them about theproblem. At the time, editing card numbers was not possible forfat-fingered people like me, but that feature has since beenadded.

One of the nice features of Gyft is it enables a cardholder tosend any card in their mobile wallet onto another friend. When thatfriend receives and opens the gift, the application lets the senderknow. That can provide useful reassurance and a reason for friendsto reach out, once they know a gift has been received.

Gyft is one of a number of third-party applications that allowcardholders to do things with retailer-issued gift cards withoutinvolving the issuer. Retailers should learn how these third-partyapplications operate to prepare both for the upside and thedownsides. On the downside, they want be prepared to avoid anypossible pitfalls like mistyped card numbers to ensure customers donot have a bad experience in store as a result of a third party’sapplication. Issuers also want to understand these programs so theycan take advantage of possible marketing and channelopportunities.