A Thing
The Green SheetGreen Sheet

The Green Sheet Online Edition

November 28, 2011 • Issue 11:11:02

Openbucks provides uplift for prepaid

sellingprepaidA new acronym has entered the payments lexicon: O2O. Short for online to offline, the term conveys how online methodologies steer revenues to the offline, brick-and-mortar retail sector. Openbucks Corp. leverages technology that sits in the middle of the O2O flow to drive revenues in both directions.

Via the Openbucks Gift Card Payment Network, closed-loop, brand-name gift cards are integrated into the payment mechanics of online game publisher websites. When gamers want to enhance free-to-play gaming experiences, they can pull out gift cards purchased at six different retailers presently to pay for avatar upgrades and other in-game enhancements for such games as World Golf Tour and Parallel Kingdom.

The new option of paying with gift cards is geared toward teenagers, who make up the bulk of online gamers and have limited or no access to credit and debit cards. On the other hand, access to gift cards is ubiquitous. Analysts estimate the gift card market in the United States at $100 billion annually.

O2O2O

The technology initially drives interest online to offline, as gamers see that gift cards can be used for in-game payments. But then the synergy between online and offline kicks in, driving revenues up for both issuers and game developers. Based on information from Subway (one of the gift card issuers in Openbuck's network), 90 percent of the gamers who purchase Subway gift cards did so primarily to use in games, according to Marc Rochman, Chief Executive Officer and co-founder of Openbucks.

Gamers typically purchase Subway gift cards loaded with between $100 and $500 – commonly four times the amount purchased by other Subway patrons. Additionally, 54 percent of gamers also bought food at Subway in addition to the gift cards.

Furthermore, 18 percent of the amount loaded on Subway gift cards is spent later, on sandwiches and other Subway purchases, Rochman said. The service is therefore not only an online to offline traffic generator. Rochman said, "It's O2O2O – online to offline and offline to online. That's the beauty of it."

The beauty of reverse distribution

Rochman does not consider Openbucks a gift card exchange in the mold of Plastic Jungle or Cardpool Inc. Cardholders lose value on gift cards when they sell them via online exchanges. On a $100 gift card, the seller might be returned only $70, Rochman said. In comparison, a consumer who buys a $100 Subway gift card and redeems it online via Openbucks receives the full value of the card.

The Openbucks network is merchant funded. Online game developers pay fees to Openbucks for "reverse distribution" of the gift cards, Rochman said. Those fees are shared between Openbucks and the card issuers. The game developers get to choose which gift cards will be accepted for payment on their websites, he added.

Openbucks, which launched the platform at the September 2011 TechCrunch Disrupt conference in San Francisco, has apparently attracted the attention of the game developer community.

"When a game publisher adds a new form of payment, they usually increment by something like 20, 30 percent," Rochman said. "They remove some friction they have in their payments. To add a good form of payments, you're just going to reach more people. And the beauty in games is that their margins are so high that anything you bring them is a no brainer." end of article

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

Prev Next
Facebook
Twitter
LinkedIn

Current Issue

View Archives
View Flipbook

Table of Contents

Features
Selling Prepaid
Views
Education
Company Profile
New Products
Departments
A Thing