Retail

Giving The Gift (Cards) Of Stocks

Gift cards are a big business — a $100 billion-plus one, in fact. They’re available practically everywhere, in both physical and digital form (and integrated into mobile applications in the latter case, of course). The product’s ubiquity, flexibility and ease of use (both from the sender’s and recipient’s perspective) have led to its having been used by more than 90 percent of consumers.

Compare that to the business of trading stocks — which is not viewed, by a majority of consumers, as a user-friendly experience. Prohibitive costs and a perceived lack of convenience contribute to the fact that, at present, only about 14 percent of Americans own a direct stock, according to Stockpile CCO Dan Schatt, who notes that the number is even lower in “every other country.”

As Schatt recently shared with PYMNTS in a conversation about his upcoming appearance at Innovation Project, Stockpile’s mission is “to make the stock market something that’s accessible and affordable for everyone.”

And the company is doing so by integrating stocks into something that is, by and large, accessible and affordable: gift cards.

Put into that format, the practice of owning and trading stocks (as well as additional financial products, such as exchange-traded funds, or ETFs) becomes easy, says Schatt, “particularly now, when you can ultimately get stock from just doing what you do every day, which is shop at a grocery store or big box retailer.”

With Stockpile cards having rolled out over the winter holidays at retail locations, including Safeway, Giant Eagle, Wegmans, Office Max and Kmart — for a total of about 400 stores, initially — Schatt reports that the sales results were so successful that the company plans to ramp up its presence thirtyfold and will be available in over 14,000 retailers by the spring.

“The way the retailers look at it, it’s a new reason for you to even come in the store,” observes Schatt. And it doesn’t cannibalize existing gift card revenue because those for stock — being an “investment in someone’s future” — lend themselves more appropriately to milestone occasions, such as weddings and graduations, than do standard gift cards.

Stockpile represents the first introduction of a new category into the gift card space in “seven or eight years,” by Schatt’s estimation, and it’s also one that offers a distinct appeal to millennials and parents of consumers under the age of 18.

Regarding the latter case, Schatt has observed that a large percentage of Stockpile accounts being opened are custodial ones.

“Our system actually allows the kid to have their own login,” explains Schatt, “so they can actually place trades with the adult’s permission.”

By applying “iTunes pricing” — $0.99 for the stock owner to buy or sell more — to its transaction model, as well as offering the ability for consumers to track their investments, Stockpile has become, in Schatt’s description, “the modern-day equivalent of the savings bond.”

Additionally, the ability for Stockpile customers to “buy by the dollar” (rather than by the share, as was the traditional model) and its removal of the necessity of a brokerage account — on either the gift card recipient’s or the sender’s end — to make transfers has raised the veil on the previously held misconception that only a certain type of consumer (mainly one of a minimal threshold of affluence) has an interest in trading stocks.

“It’s attracting a whole set of new people that otherwise would have never gone into investing,” says Schatt. “Now, we’re seeing people that can trade in $5 increments. So, we’re seeing sort of a larger macrotrend of being able to take things into smaller pieces to allow people to trade at their own comfort level.”

Part and parcel with the consumer comfort factor of Stockpile is that a gift card recipient can change the company whose stock is loaded onto it, automatically.

One more element that Stockpile has brought to the trading space? The ability to make purchases using a standard credit or debit card, PayPal and even cash.

“That’s never been done before,” Schatt remarks. “It’s never been possible to actually use your credit card or debit card to ultimately own an investment.”

Bundling all of those features into a gift card that operates on a platform service with APIs “changes the game,” says the Stockpile CCO, on a number of channels, including loyalty, remittances and money transfers.

“We’ve figured out a way to take what would have historically been complex financial services products and turn them into an everyday consumer product that you can buy at the local grocery store,” notes Schatt.

Looking ahead to further innovation that could stem from the Stockpile model, Schatt posits that “if you can do this with something as complicated as stock, there’s really no financial services product that you couldn’t necessarily do the same thing with.”

“Distribution is part of the innovation,” he continues, “but part of it is turning this into a consumer product and making it a platform that anyone can enable. This, we think, will ultimately enable other ecosystems to develop” — whether that be employee incentives and recognition, online banking methods, loyalty currencies and onward.

By integrating a largely unfamiliar area — stock trading — with one that is much more common — gift cards — Stockpile has, as Schatt concludes, “done something from [an overall] consumer experience perspective that makes this a much more appealing product.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the December 2019 Mobile Card App Adoption Study, PYMNTS surveyed 2,000 U.S. consumers for a reveal of the four most compelling features apps must have to engage users and drive greater adoption.

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