Merchants are leveraging their digital gift card platforms for quick digital promotions.

The digital card platform can be used as a less expensive alternative to creating new loyalty programs with a third party, said Michael Fletcher, general manager at InComm Digital Solutions.

"Merchants are starting to use digital cards in a little different way than they used physical cards," Fletcher said.

Merchants who use digital gift cards for loyalty and incentives programs can set expiration dates on the cards to draw consumers to the store within a given timeframe. Some programs use geolocation tracking to send offers to a customer's mobile device when they are near a store location.

"Large retailers already have relationships with gift card processing platformsÂ…and in that platform they can set up different criteria and a different range to leverage the platform for digital promotions," Fletcher said. "It's very cost effective and quick to leverage that stored-value platform."

In 2009 and 2010, when InComm started offering digital gift cards, less than 5% of consumers were opening the gifts on their mobile device, said Fletcher. Today more than a third of the digital gift cards InComm delivers are opened on a mobile device. "From a convenience standpoint [mobile gift cards] are a big deal," he said.

InComm announced this week its purchase of Inc., a Nintendo of America Inc. unit that provides integrated point of sale services.

Other companies are placing more attention on digital cards as well. At the end of July, LevelUp added a gift card program to allow merchants to sell both physical cards in-store and digital cards through the company's mobile app.

Some of this is driven by consumers' interactions with their smartphones.  Recently First Data announced it would be acquiring Gyft, a provider that gives bigger rewards to Bitcoin users and PayPal users when they purchase mobile gift cards. 

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