SmartClixx founder and CEO Gary Dinkin announced last week he has launched a company to distribute gift cards for retailers in competition with other card-distribution companies such as Blackhawk Network Inc. and InComm Inc.
The new company, called GiftClixx LLC, would enable retailers to negotiate terms and conditions for distributing and activating gift cards directly with one another, which should lead to lower costs, Dinkin tells Prepaid Trends. "They strike their own terms and conditions on what they are going to pay each other," he says.
Dinkin serves as CEO of GiftClixx. Both SmartClixx and GiftClixx are based in Boca Raton, Fla.
Over time, Dinkin expects that companies will offer standard arrangements through GiftClixx so they will know how much others charge to market gift cards. But, he says, the nature of the GiftClixx system will enable retailers to negotiate special deals with one another.
Card-distribution companies charge retailers a percentage of the face value of gift cards to distribute and activate them, but GiftClixx plans to charge only pennies to activate cards, Dinkin says. He declined to disclose a specific amount.
Instead of setting a price and terms and conditions for retailers marketing each other's cards, GiftClixx would serve only as a manager of the technical details. GiftClixx would process the card transactions, handle settlement and reconciliation, and manage the inventory, Dinkin says.
"We don't want to negotiate the terms and conditions. We want to do the technical pieces," Dinkin says. That means retailers do not need to set up new processes for each outside company that markets their gift cards.
"They only have to worry about one connection," Dinkin says. "They manage their own agreements, but we manage the connections."
Gift Clixx also does not plan to provide displays for use in stores but will let retailers make their own decisions on how to display cards, Dinkin says.
The company has begun negotiations with banks and retailers to distribute gift cards, which he says he cannot name because of nondisclosure agreements.
"Right now, we just launched–we're in the process of talking to a whole lot of folks," Dinkin says. GiftClixx plans to get banks to sell a variety of gift cards in their lobbies, he says.
Dinkin says he came up with the concept for the new company after a SmartClixx customer conference last year. The timing of the start-up has nothing to do with Greenwood Village, Colo.-based First Data Corp.'s April announcement that it plans to buy Atlanta-based Interactive Communications International Inc. (InComm), he says. SmartClixx competes with First Data for processing business, Dinkin says.
Blackhawk, which is based in Pleasanton, Calif., is a subsidiary of grocery-store operator Safeway Inc.
InComm declined to comment.
For its part, Blackhawk says it has no problems with having additional companies in the market.
"We welcome any new entrants as it proves that the market is continuing to grow," says Teri Llach, Blackhawk group vice president.
Blackhawk works with more than 300 retailers. The company distributes cards in more than 83,000 individual stores, Llach says.