Categories: PYMNTS Topic TBD

Making the ‘Swych’ To Perfect eGifts

The holiday shopping season is well upon us, and the eternal question remains: How does a gift giver make sure that the gift receiver feels as though they have received the perfect gift? Gift cards may seem a logical answer. They can be picked up in a hurry and can be used at the recipient’s choosing in terms of time and place.

But not brand. Therein lies a conundrum. What happens if you buy a card from a store that’s not exactly right for that person? Stuck is stuck, with a tight smile of thanks, and perhaps that card is left in a drawer.

That’s the plastic side of gift cards anyway, but more and more, gift cards are making the switch to digital, which means greater choice. In the latest installment of PYMNTS Topic TBD, Karen Webster spoke with Swych CEO and Founder Deepak Jain to discuss the move from hard cards to cards delivered in bits and bytes and how that can change the gifting landscape.

As to how mobile changes gifting, Jain noted that mobile has “absolutely brought a whole new dimension to gifting. Not only is mobile making gift giving easier and faster, but it is also making the recipient of the gift have that much more of a better user experience because they can store their gift card in their mobile wallets, in their mobile apps, and have them with them all the time.”

And, he noted, the integration of things like location-based services can remind these users of when to use their gift cards. Mobile technology has also helped to make the transactions more secure, continued Jain. “They can control fraud much more effectively,” he said, and there is also the benefit for financial institutions that allow for additional revenue generation.

Jain also remarked that innovation in the gift card space — using mobile as a delivery channel — has been marked by “a lot of attempts to digitize gifts and creating a digital channel for sending gift cards. But a lot of them were just equivalent to sending a digital version of a gift card through email.” And that conduit, he said, is not enough to move the needle for adoption in an industry where 5–10 percent of the gifting is digital (as measured in the U.S.). There are some estimates that as much as 18 percent of gift card giving by the end of this year will be digital.

To boost mobile adoption, a more holistic approach is required, to make digital “the preferred channel” where the problems remain outstanding ones — namely, digitizing digital gift cards or redeeming them after they have been received.

Jain believes that the digital gift experience needs to be easy and simple for both parties. That, he said, isn’t about 100 different apps stretching across 100 different retailers, but instead, there should be strong integration across platforms, such as the Apple Pay wallet, where digital cards pop up automatically on a user’s home screen when they are walking into a merchant.

Webster noted that many stores will now offer a gift card if a consumer spends a certain amount of money across the holiday season, yet those cards are sent via mail, in tangible form, and have a very quick expiration date, which can lead to friction for the redemption process. Jain stated that gift cards remain one of the most preferred ways for some retailers’ incentive programs to work. “But most of these incentive programs do not have the digital technology to leverage mobile phones or smartphones to deliver incentives that way.”

And also, he said, there is the lack of predictive ability to find out just what that consumer is going to use that gift card to buy and where and when. Additionally, there’s the lack of feedback for how the incentive is actually working, including whether the gift card was ever used.

Jain explained that other firms (including even eBay) have platforms that allow gift cards to be sold on online marketplaces. That is a model that may not be optimal, he said, because, once that recipient’s unwanted gift card is sent onto one of those aforementioned platforms, there can be problems with fraud. That’s where Jain has focused his innovation — using mobile and digital gifting to generate a perfect digital gift right from the start.

Using the company’s app, when a gift card is sent to anybody else, it’s created in a digital form so that the recipient can switch that gift to whatever merchant he or she wants. A level of detail is also given over to the sender, explained Jain, as to what might be a good gift choice for that recipient in the future.

“When the sender sends that card,” he said, “he has the peace of mind that, even if he selects the wrong brand or selects a brand that is not of immediate relevance to the recipient, we hold that gift in a digital currency and actually purchase the correct gift card when the receiving party actually has a chance to look at the gift, see what the options are and, in many cases, they can actually get more value.”

And through the platform, various brands can offer incentives for users to switch into their brand. Thus, a $50 gift card can be transformed through this process into a $55 gift to a recipient. Offers can also be targeted to different demographics, such as millennials.

Among different types of retailers, this cross-marketing and movement into digital is a hallmark for department stores, and for back-to-school time, electronic retailers were popular.

As for bots and gift cards, said Jain, the firm will be unveiling gift bots before the holidays for testing, and he added: “We have a Skype gift bot that is coming out soon … The whole concept of a gift bot is about adding more value to the transaction.” The question becomes one of working with contact information or social media and providing more value to the user “who is not really sure about what type of gift decision he is going to make.”

“That type of information is not normally available in the app,” he said. In the end, and moving beyond plastic, he said: “The digital technology not only gives [the retailers] the competitive advantage of having the way to influence and engage the shopping behavior of the consumer but also leverage the data feedback,” he said.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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