Gift Cards Go Mobile for the Holidays

Tuesday Nov 29th 2011 by Thor Olavsrud
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As shoppers become more comfortable with mobile commerce, Giftly predicts that digital gift cards are hot for savvy consumers.

Are we seeing the beginning of a shift from plastic to mobile? Giftly, a gifting company that specializes in digital gift cards, is predicting that a "surge" in mobile shopping is on the way, and this year's holiday season will be the proof in the pudding.

"We've just seen an unprecedented move toward mobile," said Tim Bentley, founder and chief executive officer of Giftly. "People's comfort with making purchases with mobile is going to really alter the gift-buying dynamic this holiday season."

Early indications are that this year's Cyber Monday was a record-setting one, delivering as much as $1.2 billion in ecommerce sales in one day. And 7.4 percent of those sales were made with mobile devices, according to IBM Benchmark.

The National Retail Federation (NRF), a trade association that represents retailers, surveyed shoppers over the Thanksgiving weekend about their use of smartphones and tablets to shop. It said that 25.7 percent of Americans with tablet devices said they did or will purchase items with the devices, and 37.4 percent will or have researched products and compared prices with their tablets. Overall, NRF said 57.1 percent of shoppers with mobile devices said they have or will use their tablet devices to shop for gifts over the weekend.

Giftly, a small business based in San Francisco, hopes to capitalize on this trend with its personalized digital gift cards that recipients can use at millions of local establishments.

"More and more, we're seeing our lives centered on our mobile phones, reflecting both the need for personalization and anytime, anywhere convenience," Bentley said. "Traditional plastic gift cards are the opposite of that. The feedback we're hearing is that people don't want to worry about carrying around yet another gift card, for fear of losing or forgetting about it, let alone its environmental impact. Giftly is a gift card you can feel great about giving."

Giftly may be a small business, but gift cards are not. Bentley said U.S. consumers will purchase more than $100 billion in gift cards this year, and about 50 percent of Americans will buy and receive a gift card this year.

Bentley thinks mobile gift cards can capture a chunk of that market by offering consumers both increased ease of use and personalization.

Consumers purchase Giftly's digital gift card online through the Giftly website and then deliver it through email or Facebook. The receiver then links that digital gift card to their credit card or debit card. When they wish to make a purchase with the gift card, they notify Giftly with their mobile device. Giftly then immediately credits the gifted amount back to the credit card or debit card.

"You won't find yourself with gift cards with $1.50 left on them," Bentley said. "We credit you the full amount of the gift rather than leaving spare change behind."

He added, "We realize that gift cards today are really merchant-centric. Unfortunately, part of that means that they're not very interested in making sure you use every bit of it. We decided to make Giftly all about the buyer and the gifter and the gift they're exchanging."

Part of that is the personalization that Giftly offers. The buyer chooses which merchant or combination of merchants the gift card can be used with.

"I can go onto Giftly and select my mom's favorite restaurant and a local movie theater and send her a gift card that works at both of those places," Bentley said. "We have thousands of merchants to choose from. It works through the credit card network, so that allows us to offer a huge number of options to the buyer."

Giftly launched in September and was engineered using the Ruby on Rails open source Web application framework. It lives on Heroku, the platform-as-a-service provider owned by Salesforce.com.

The site runs with 128-bit SSL encryption, and Giftly has partnered with Chicago-based payments firm Braintree to secure its payments. With Braintree's technology, no payments information Giftly collects is ever stored on its servers. Instead it uses Braintree's transparent redirect API to store that information in Braintree's secure data vault.

Thor Olavsrud is a contributor to InternetNews.com, the news service of Internet.com, the network for technology professionals.

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