The Future of Gift Cards

When Apple introduced the Passbook feature on its iPhone iOS 6, it gave consumers and retailers alike a lot of opportunities. Consumers could store a host of coupons and gift certificates on the app and easily redeem them while shopping in stores; stores could increase traffic and redemption rates by making it easier for customers to use their cards.

Early adoption was limited, but CashStar, a provider of digital gift card programs, is starting to see interest from a number of large retailers.

Gene Cornfield, CashStar vice president of marketing, says that 55 of the more than 300 retail brands that CashStar works with have enabled their gift cards for Passbook. The overall growth in sales via mobile phones is a key factor in retailers’ interest, he says, noting that sales of phone-generated gift cards increased 800 percent from 2011 to 2012.

So many people buying the cards from phones is an indicator that a good number of recipients will want to store that value on the phone rather than on a PC or in their e-mail inbox, Cornfield says. Already about one-third of customers who purchase e-gift cards from a smartphone are opening that card on the phone. And two-thirds of those are using Apple’s iOS 6 devices that contain Passbook. Furthermore, about 30 percent of iOS 6 users are adding mobile gift cards to their wallets.

The volume of digital gift cards stored in Passbook has doubled from 4 percent to 8 percent in recent months, Cornfield says. “This is an indication of the strong interest in adoption.”