The realm of consumer incentives and rewards is one of expanding possibilities. Once upon a time, the redemption of digital rewards at brick-and-mortar stores was accomplished only after consumers printed out virtual rewards cards from PCs and then presented the print-outs at the POS, where bar codes printed on physical paper were scanned. That awkward ballet is being replaced by a more fluid experience facilitated by smart phones and digital gifting companies like Giftango Corp.
Today, consumers equipped with smart phones can walk into stores, and mobile applications on their handsets direct them to in-store discounts, that can be redeemed in real time at the POS. Instead of presenting print-outs, consumers hold up phones to allow special bar code readers to scan quick response (QR) codes from touch screens.
David Nelsen, Chief Executive Officer at Giftango, likens his company to the "hub of the digital rewards and incentives system" that connects merchants to mobile apps and closed-loop gift card or stored-value account processors, such as First Data Corp., Chase Paymentech LLC and Vantiv LLC. "All those merchants are sitting on a fragmented set of processors throughout the marketplace," Nelsen said. "And somebody needs to bring all of that together to create essentially a single language."
In Giftango's case, that "language" is its application programming interface to which mobile application developers and processors connect. "We're connected to all of these banking systems so that we can go immediately [to] retrieve that stored-value [denomination] on behalf of that merchant and present it through that app," Nelsen said.
Giftango is tapping into the $100 billion rewards and incentives market in the United States, where merchants employ a variety of strategies to entice consumers into stores, get them to spend money and then get them to repeat steps one and two. The latest strategy is accomplished via mobile apps.
Giftango recently partnered with Silicon Valley-based application developer shopkick Inc. The shopkick app, which reportedly has over 3 million active users and has surpassed 1 billion in-app deals and offers viewed, allows consumers to earn reward points called "kicks" for walking into stores and making purchases. "Kicks" can be redeemed for in-store gift cards, among other rewards.
Nelsen said apps like shopkick are valuable tools for merchants because they engage consumers in a new way and motivate them to shop. "You really start to see how digital incentives and digital rewards is going to be an emerging marketplace because it's one of the best ways to make people get off their butts and go do something," he said.
Giftango is POS solution agnostic, so it will work equally well with phones enabled with near field communication (NFC) technology or with bar codes, according to Nelsen. Both solutions require new technology at the POS. To take NFC payments, POS devices must be embedded with NFC technology. For QR or other two dimensional (2D) bar code installations, traditional one dimensional laser scanners need to be upgraded to read bar codes off of high-definition smart phone screens. The alternative is that cashiers key in bar codes by hand.
Even though Giftango research showed cashiers are surprisingly adept at keying in the codes manually, at quick service restaurants (QSRs) where line speed is crucial, upgrading scanners might be advisable, according to Nelsen. QSR chains like Subway and Burger King Corp. are working "very very hard" to develop POS solutions, he said.
A leader in this movement is coffee chain Starbucks Corp. A white paper sponsored by Giftango and conducted by C2 Consulting Services LLC said the Starbucks mobile app, which launched nationwide in January 2012, uses 2D bar code scanners that can store large amounts of data, making them ideal for loyalty applications.
The white paper, entitled Mobile Scanning Devices: The Value of Being Prepared, said the new scanners cost between $100 and $1,000 per unit, with handheld models from Honeywell International Inc., Intermec Technologies Corp. and Datalogic S.P.A. ranging in price from $120 to $350.
Nelsen said one of Starbucks' advantages in its mobile POS payments rollout was it had the financial resources to upgrade scanner technology at over 12,000 U.S. locations. He believes the price of the scanners will creep downward in the next few years.
June 2012 has been a busy month for Giftango. Beyond its partnership with shopkick, Giftango expanded into Europe by launching its Giftango International subsidiary in Dublin, Ireland, and agreeing to provide electronic gift cards for the corporate customers of U.K.-based prepaid voucher provider Park Group PLC. Additionally, Giftango won the Best Prepaid Innovation award at Prepaid Awards Canada for its virtual gifting platform.
It is early days in the virtual gift card and mobile rewards and incentives space, according to Nelsen. "I think there's a big prize at the end of that rainbow for those merchants who get it right as they get to be the first to take advantage of an emerging market," he said.
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