Swych launches cross-border digital gifting business with India acquisition
The digital gift card platform company Swych has launched a gift card service for instant cross-border gifting to India following its recent acquisition of GiftCardsIndia.
Targeting an opportunity to apply its U.S. digital gift card platform to the lucrative U.S.-to-India remittance corridor, Swych, which is based in Texas, launched its instant gift card service for U.S. consumers who want to send money to friends and family in India.
The expansion by Swych appears to go counter to recent trends in the U.S. gift card market, which has been experiencing pressure as consumers have begun to pull back from prepaid and gift cards. The sector has also seen some consolidation such as the acquisition of digital gift card specialist CashStar by Blackhawk Network in 2017 and Blackhawk itself being acquired by VC firm Silver Lake in 2018.
Swych is a mobile digital gifting platform that enables users to send mobile gift cards that can be exchanged — or as the company says, “Swyched” — by the recipient to an alternate gift of the recipient’s choice.
“It makes the gift more relevant and more likely to be used,” said Harpreet Chawla, vice president of digital products and innovation of Swych.
When a sender chooses a gift card to send someone, Swych holds the money in escrow and then sends a notification to the recipient via their mobile phone. The recipient can choose to accept the original gift or exchange it for an alternate gift card of the same value. Once the choice is made, Swych then purchases the gift card and provisions it to the recipient’s mobile device. Swych earns a commission from the merchant when it purchases the gift card.
The purchase of GiftCardsIndia was a calculated move for the company to capitalize on the opportunity of the global remittances being sent to India from across the globe. The deal gives Swych an existing domestic business serving millions of consumers with a robust stable of brands such as Flipkart, Big Bazaar, Levi’s and Nike. By enabling the instant cross-border gifting from the U.S. to India, Swych predicts it will be able to tap into the remittances being sent to that country each year.
According to Pew Research Group, almost $11 billion was sent from the U.S. to India in 2016, making it the third-largest remittance corridor from the U.S., after Mexico and China.
Since much of the money being sent from the U.S. to India is being used for shopping, the cross-border digital gift card business model takes advantage of that activity, Chawla noted.
Once the U.S. to India cross-border gifting business has been established, Swych plans to begin exploring other remittance corridors to India. For example, the UAE to India corridor was $12.6 billion in volume in 2016, according to PEW Research Group. Other large corridors to India included the U.K. ($3.6 billion) and Australia ($1.8 billion).
Swych is a privately held company. Chawla noted that one of its primary investors is UAE Exchange, which is a global money transfer, foreign exchange and payments solution brand based in Abu Dhabi.