Payment processing company First Data recently completed an acquisition agreement with the two-year old virtual gift card provider Gyft. The combination of the two companies' services could provide a boost to the small segment of the market that is virtual gift card provision.
Gyft has received funding from various investors in its time as an independent company. A recent article at Pando concerning the pending acquisition says Karlin, Google (News - Alert) Ventures, A-Grade Investments, Canyon Creek Capital, The Social+Capital Partnership, and angels David Sacks and Haas Portman provided Series A funding worth $6 million.
Pando explains that the virtual gift card market is but a small part of the market overall. Although gift cards produce a global revenue stream of $100 billion each year, small and midsize companies can find them hard to manage and track, and as a result, they become more of a hassle than what they are worth.
Virtual gift cards, on the other hand, offer methods of tracking that are much easier. They are also much simpler to deploy. And those two elements make them attractive to businesses of all sizes. There is also no cost for additional materials or a need for specialized or updated card-reading software to make virtual payments compatible with businesses' payment systems.
Businesses simply monitor and transfer virtual payments electronically. Data may be contained in cloud servers for ease of access, and provision of virtual currency through smartphone apps is simple for businesses to aggregate when they crunch their numbers to determine how many gift cards they have sold and to whom they have sold them.
Gyft makes it easy for consumers to purchase and use virtual gift cards directly from their mobile devices. They can complete the process without even visiting brick-and-mortar stores, and Gyft apps can provide reminders to users who have money waiting for them to spend.
This helps solve the problem of consumers losing their cards, and as such, it saves businesses from losing money into the pit of state unclaimed property funds. People who lose or do not use their cards are not just hurting themselves, Pando says, they are forcing businesses to lose funds that end up as unclaimed property. Although not every state requires such a process, several states force businesses to turn in the value of unclaimed gift cards after predetermined periods of time.
Gyft, the report says, will continue to operate as a standalone brand and will retain all 18 members of its team following the First Data merger.
Edited by Adam Brandt
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