by Kate Mulcrone | November 12, 2012
Mobile gift cards were hotter than ever in 2012 and the trend shows no sign of slowing down in the new year. The technology behind mobile gift cards is becoming ever more advanced: instant delivery, advanced tracking capabilities for program administrators, and endlessly customizable cards are just some of the distinct advantages that mobile gift cards offer.

Mobile gift cards are also far more secure than traditional plastic cards, since there's no risk of a mobile card being lost by the recipient, or stolen. Still not convinced? Redemption rates tend to be higher with mobile delivery of gift cards when compared to traditional plastic cards.

On-Demand Activation

In July, San Diego-based Transaction Wireless introduced a system that enables digital gift cards to be activated only when the intended recipient clicks on a pre-specified link or button. Without the link, the gift card holds no monetary value, which means that liability, risk, and the potential for fraud are dramatically reduced for both retailers and consumers.

The patented technology involves a system whereby a digital gift card requires the recipient to physically click a specified button or link to initiate the feedback loop and activate, similar to calling a toll-free number to activate a traditional plastic credit card. This verification procedure is done digitally in order to streamline the process and ensure for an easy - and secure - activation.

How has this new system worked out in practice? "It's been well received, especially when it's used  for promotional gifting," says Thomas Niedbalski, senior vice president of business and client development for Transaction Wireless. "Gift cards have always been popular, but the costs associated with plastic, not to mention the chance that the recipient will lose the card or it will be stolen, were challenges. Digital gifting solves these two problems."

To Market, To Market
Instant delivery and lower costs to implement make mobile gifting a much more flexible choice for program administrators, but there are other advantages that aren't so immediately apparent. Mobile delivery allows for customization of dollar amounts, and beyond that, the ability to target groups and set up future fulfillment to the day, hour, and minute. Digital delivery is ideal for spot awards, so-called "surprise-and-delight" campaigns, where monetary gifts are matched with a personal element, and social media campaigns. The flexibility of mobile delivery also allows recipients to easily "regift" their awards, whether it be to a loved one or to a charity.

"Our retailers are focusing more and more on charitable giving," Niedbalski says. One client worked with the National Breast Cancer Foundation, for example, and recipients were able to seamlessly turn rewards into charitable donations made in their own names.Safety First

Portland, OR-based Giftango has been in the digital gift card business since 2005. In July, it achieved Payment Card Industry (PCI) Level I certification. This certification for companies that handle credit card information ensures that they are meeting the highest security standards and keeping users' card data private and protected.

"Security has always been a top priority at Giftango," says Leslie Arifin, chief information officer for Giftango. "We actively sought PCI certification because we wanted to push ourselves to maintain the premier requirements in the industry. Achieving PCI Level I Certification is an accomplishment that reflects our diligence and integrity."

Of course, Giftango is by no means the first or only digital gift card provider in the channel market to achieve this distinction. Transaction Wireless was awarded PCI Level I certification in August 2011. "Although PCI focuses mainly on credit card data, Transaction Wireless treats all account data, including gift card account numbers, with the same security measures," Transaction Wireless CEO Doug Schneider said in a statement announcing the certification. "In today's digital world, companies need to ensure their customers' data is not vulnerable to security breaches, and Transaction Wireless is well positioned to protect customer data."

What's Ahead
Ontario, Canada-based Global Reward Solutions (GRS) has launched a new program that takes its mobile gift card delivery system global. GRS's client dashboard lets companies filter and design custom rewards programs by customer and country, and a global currency calculator ensures all reward point values are updated daily based on the latest currency fluctuations. This means that customers can now design culturally specific programs while providing real-time tracking and reporting on a global scale.

GRS merchandise is available today in 55 countries, and most of these markets have tens of thousands of rewards to select from with a three- to five-day delivery window for most of the world. GRS's digital reward offerings include everything from travel and tickets to events to a fully integrated digital media library with millions of songs, movies, and games to a "virtual" Visa card. Best of all, these rewards are delivered in real time - a distinct advantage to mobile delivery that traditional gift cards just can't match.

Since securing its PCI Level I designation, Giftango has been eyeing opportunities in the open-loop card space. "The certification opens the door for delivering open-loop card data. Our core strengths revolve around successfully delivering digital content for a broad spectrum of merchants across a wide variety of channels," said David Nelsen, CEO of Giftango, in a statement. "Our technology, alongside the mobile wallet applications that Google, PayPal, ISIS and others are beginning to launch, is swinging the door open for a digital open loop card to enter the mainstream. We look forward to leading the way with new products that help the merchants and channels we work with engage their customers. This PCI certification is another step in that direction."

According to the Incentive Research Foundation and Incentive Gift Card Council's 2012 joint report on gift cards, "It's in the Cards! An In-Depth Look at Pre-Paid Cards in Incentive, Rewards & Recognition Programs," closed-loop cards are still the most commonly used type of prepaid card in incentive programs, but they are losing ground to open-loop cards.