Virtual gift card provider Giftango Corp. on Sept. 1 released a software-development kit that enables mobile-phone application companies to develop gift card products consumers may use at the point of sale or redeem online.

The kit is part of Giftango’s efforts to help application developers connect to merchants interested in virtual mobile gift cards, according to Giftango CEO David Nelsen. Virtual gift cards contain card information, but usually there is no card.

“The brands know if [developers] use our platform, the brand is going to be displayed in the proper way and the consumer experience is going to be good,” Nelsen says.

Giftango’s merchant partners include Fandango, Nike Inc. and J.C. Penney Co. Inc. Mobile-application developers now have the opportunity to work directly with those brands.

The kit enables developers to tap into what is known as an application-programming interface. The interface connects the developer to multiple merchants’ backend systems to access and deliver the cards to consumers using mobile-gifting applications.

 Mobile developers routinely have difficulty connecting with major merchants “because of how many ideas [for mobile gift cards] are hitting these merchants” at any given time, Nelsen says.

The kit helps instill “a process to help merchants weed out ideas they shouldn’t be paying much attention to,” he adds. “Once we get past that, we have the ability to give the mobile developer access to cards for the brand.”

Mobile developer Wildcard Network Inc. has both dealt with merchants directly and has used Giftango’s kit.

Companies will meet and work with individual developers, depending on their “comfort level,” says Wildcard CEO Raj Basavaraju. “If they see the benefit in what we’re trying to do, it’s easier to build that relationship” with the merchant, he adds.

Wildcard has a mobile gift card application for Apple Inc’s iPhone and is developing one for other smart phones.

Merchants likely will opt to have the mobile gift card display an account number that a cashier enters at the point of sale. A two-dimensional barcode is an option, but most merchants lack image-capture hardware, Nelsen says.

“We tend not to show the bar code for now, as we’re waiting on merchants to get image-capture [hardware],” he adds.

The kit also is part of Giftango’s plan to move the virtual gift card market from an email-based distribution model to a more readily available environment on the smart phone.

Last month, Nelsen told PaymentsSource Giftango was focused on what “the next step will be, and that’s transitioning from e-mail to mobile.” (see story)

Indeed, mobile may be a way to entice more consumers to purchase closed-loop gift cards, observers say.

Growth in the gift card market has slowed, but merchants will seek new ways to market closed-loop cards, especially as virtual cards and mobile integration begin to gain traction, says Ben Jackson, senior analyst with Mercator’s prepaid advisory group.

Giftango and mobile developers are considering ways to add functionality, such as loyalty and incentives, to applications to make gift cards more appealing. “Ultimately, a lot of these applications need to give back some real-world reward in certain cases, and [the kit] gives them the ability” to develop it, Nelsen says.

One idea Wildcard is tossing around is an incentive for infrequent gift cardholders, Basavaraju says. “The merchant can give them a $10 incentive on top of the card’s balance if [a card] hasn’t been used in three months,” he says.

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