By Deborah Merkin, GiftCard Partners Inc.

Navigating the Next Generation of Gift Card Technologies

Questions, concerns and challenges abound as multichannel retailers sort through all the recent technological advancements with payments, promotions, gift cards, e-certs, m-certs, deal sites, mobile wallets, Quick Response (QR) codes, Near Field Communication (NFC) and … you can fill in next week’s technology. These rapidly changing technologies open up new opportunities and sales avenues for all retailers, but multichannel retailers find unique struggles when incorporating these technologies into their B2B gift card distribution channels. In this article, we’ll walk through the technologies available to retailers, the benefits of incorporating them into your B2B gift card channel and some of the challenges of implementation.

Why Bother?

Adding technology to the shopper’s experience is ultimately about adding a convenience factor while driving up sales. Consumers are locating merchants, receiving geo-targeted promotional information and redeeming e-certs and offers through their smartphones, and it won’t be long before mobile devices become consumers’ preferred (and possibly) primary payment instruments. In the consumer marketplace, this demand drives the retailers’ decisions to implement e-cert and m-cert (mobile certificates or mobile gift cards) technology, and relative to the B2B market, it is cost effective and provides some additional marketing opportunities.

But before we get into the benefits and challenges of adding a virtual or mobile element to your B2B program, let’s get familiar with some of the technology and how it’s used:

  • e-certs, e-gift cards, e-certificates and virtual gift cards are synonymous; they can be used online or printed out for redemption at a brick-and-mortar location. E-cert recipients are typically directed to a URL, which leads them to a secure printable version of the e-cert that can be redeemed in store.
  • Retailers have begun to update their POS systems to be able to scan a barcode on a smartphone, although some still require cashiers to manually enter the card number.
  • Social media channels, promotional companies and CPG (consumer packaged goods) manufacturers are creating offers through a variety of social media channels like Facebook and Twitter and they are utilizing e-certs in conjunction with QR codes.

These offers can be displayed via a barcode on a smartphone or in the up-and-coming mobile wallet.

  • Mobile wallets, also called digital wallets, function like an electronic form of physical wallets. The mobile wallet was conceived as a method of storing various forms of electronic money (e-cash). An individual’s bank account is usually linked to the digital wallet, which also might hold a driver’s license or other ID documents, health cards, loyalty cards and e-certs—all stored on the phone. The credentials can be passed to a merchant’s terminal wirelessly via NFC. Branded mobile wallet apps that store e-certs, offers, coupons and m-certs can be redeemed through a smartphone.
  • QR codes are a method of delivering an e-cert, promotion or coupon and they aren’t limited to online distribution. Merchants can print QR Codes in magazines or print flyers and display them in TV ads (television-tagging). Consumers use their phone cameras to scan the code and a third-party app is used on the phone to display the corresponding promotion, e-cert, coupon or Web page. QR codes bring together the physical and online worlds and close the gap between online and offline retail conversions … endless possibilities.

Advantages for the B2B Gift Card Marketplace

We are finding that some B2B partners are now selecting e-certs and m-certs for their programs. Their recipients receive almost instant gratification, which is of great interest to the partner and can inspire loyalty to the retailer.

At the same time, when multichannel retailers take advantage of technologies like e-certs and QR codes, opportunities expand in other areas such as consumer promotions and market research segments. For example, after taking an online survey, a participant can be instantly rewarded with an e-cert. Although the participant doesn’t have the physical card in hand, it very well could be the offer of the instantly delivered e-cert or the intrigue of the QR code that attracts participation.

As retailers adjust to this changing technology landscape, the ROI is clear in the consumer marketplace, but the B2B marketplace introduces more financial challenges than the simpler bulk exchange of plastic cards. Key players in the incentive and loyalty space recognize that there is relative ease and potential cost savings for the fulfillment of digital offerings due to the elimination of shipping and reduction of fulfillment costs, but ROI has yet to be shown on a larger scale.

Because the majority of e-cert and m-cert programs are so new in the B2B marketplace, and there are currently no standards in place, proving ROI in the B2B space is more difficult to do.

Challenges of Implementation

The B2B market provides unique technical challenges for a retailer and its clients, which might include third-party incentive/loyalty houses, scrip companies, promotional agencies and market research organizations. To fulfill e-certs and m-certs in bulk to these parties, there is a significantly different technology backbone that is needed.

First, you must select a middleware provider(s) (e.g., CashStar, RevTrax, Transaction Wireless and Giftango) or opt to engineer the process internally. Factors for consideration include cost, ROI, flexibility and scalability of the platform. Whether you use a major processor or process in-house, you need to address integration issues between your processor and your provider’s system of choice.

Security is an important issue as you move to the digital realm. You will have to be able to deliver e-certs in bulk to your B2B clients in a secure manner to protect your brand. At the same time, you also want to provide recipients with easy access to redemption channels (e.g., online, in-store).

Your B2B clients need to aggregate and distribute e-certs in varying formfactors through their proprietary software systems or middleware provider’s APIs to designated recipients. Bulk e-certs must be delivered to third parties via a secure file. The file formats vary but usually include an encrypted link containing the e-cert number, the e-cert value and a challenge code that takes the recipient to a landing page where they can display and print their e-cert. E-certs can be delivered as either active or inactive codes. If you are delivering active codes, be sure that your third-party clients have implemented secure storage and inventory procedures.

The last step in any move to digital is training. Store associates must be trained to recognize approved forms of digital offerings and understand the redemption process (e.g., scan a barcode, hand key an e-cert number).

Although B2B gift card programs are highly profitable, even the most successful programs might only be a blip on a retailer’s radar. This makes getting IT resources required to implement a bulk e-cert platform an uphill battle. It’s all about resources and the impact on the bottom line. In addition to the benefits outlined above, it’s important to note to your superiors that once a B2B gift card program is online with e-certs, other technologybased marketing initiatives and promotions can be executed quickly for little incremental cost.

In Conclusion

The e-cert and virtual gift card technology landscape changes almost daily. For example, some major loyalty and incentive companies recently have selected a single e-cert middleware provider, and the retailers are now expected to integrate with them. Events like this make it difficult to determine who is in the driver’s seat at any one time—the retailer, the processor, the middleware provider or the third-party client. Standard technical formats for e-certs would go a long way in the consumer and B2B marketplaces;standards would alleviate many of the integration issues that can plague retailers.

It is clear that the key players need to engage in an ongoing dialogue to establish best practices, methodologies and industry standards. Retailers will adopt new technologies only if they have apositive impact on their bottom lines, promote brand awareness, drive customer acquisition and increase customer loyalty. Ultimately, customer and consumer demand will be the compelling call for multichannel retailers to adopt and continue to adapt to new gift card technologies.

 

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Deborah Merkin is chief operating officer at GiftCard Partners Inc., one of the largest developers of corporate gift card programs. Merkin has more than 25 years of experience in B2B channel development, partner programs and marketing management. She may be reached at dmerkin@giftcardpartners.com.

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