May 22, 2013, 12:00 PM

Shoppers start adding digital gift cards to Apple’s Passbook wallet

25% of e-gift recipients with Apple iOS6 devices add e-gift cards to Passbook.

Lead Photo

An e-gift card in the Passbook mobile wallet.

While the hype over mobile wallets continues unabated, some retailers are demonstrating that mobile wallets can indeed be put to good use. 60 retailer clients of CashStar, a provider of digital gift cards that retailers brand, have enabled their cards, through CashStar integration, to be saved in Passbook, the mobile wallet available on Apple Inc. iPhone and iPod Touch devices running the iOS6 mobile operating system. Passbook is part of iOS6.

25% of CashStar e-gift card recipients on an Apple iOS 6 device add their cards to their Passbook wallets, CashStar says. 30% of e-mailed e-gift cards are opened on a smartphone, and 50% of those smartphones run iOS6. 6% of all CashStar e-gift cards are added to Passbook; this represents millions of dollars, CashStar says.

Merchants using CashStar’s e-gift cards and Passbook integration include Sephora USA Inc., The Body Shop USA, The Cheesecake Factory, The Home Depot Inc., Lettuce Entertain You, Wine Enthusiast, Harry and David Holdings Inc., Z Gallerie and Starbucks. A consumer purchases an e-gift card on a retailer’s web site. CashStar e-gift cards can be delivered face to face through a printable PDF file or electronically via e-mail or Facebook.

The Passbook option is presented in e-mails. CashStar’s e-mails can detect if the consumer is opening an e-mail on a device running iOS6. If he is, then the e-mail displays an Add To Passbook button. If the recipient touches the button, the e-mail inserts a pass, the digital representation of the e-gift card, into that consumer’s Passbook wallet. The pass displays the retailer’s name and logo, some art or an image, and the card balance, number, PIN and bar code.

To redeem an e-gift card in Passbook, the consumer simply opens Passbook, touches the retailer’s pass, and shows it to a cashier. If the retailer has optical scanners, the kind required to scan bar codes off of smartphone screens, the cashier scans the bar code. If the retailer does not have optical scanners, the cashier enters the e-gift card number and PIN.

CashStar enables its retailer clients to send push notification messages from their Passbook e-gift card passes that notify consumers of card balances or, through Passbook's use of the smartphone’s GPS technology, notify consumers when they are near a retailer’s store.

Gene Cornfield, vice president of marketing at CashStar, says that 6% figure for e-gift cards being added to Passbook will increase as more consumers buy iPhones. Yankee Group says 20% of mobile phones in use today are iPhones, and that figure will increase to 42% by 2017.

“The relative market share of iOS6 devices will determine increases in the percent of folks seeing the option to Add To Passbook,” Cornfield says. “The other factor is as we support more digital wallets, such as those from Samsung, Google and Isis, the percentage of e-gifts added to a digital container will increase. We have plans to add more digital wallets later this year.”

Cornfield also says that the redemption of e-gift cards via mobile wallets will spur the mobile payments industry.

“The fact that consumers are using their phones to pay for things with an e-gift is going to be a catalyst for overall mobile payment adoption,” he says. “While players on the supply side of the industry are arguing about NFC versus chip-and-PIN versus QR codes, while they are arguing what will foster mobile payments and wallets, we’re seeing consumers making mobile payments in large numbers every day today with e-gift cards.”

And retailers tell CashStar that consumers who add their e-gift cards to Passbook redeem fast, Cornfield says.

“Retailers are reporting to us anecdotally that consumers are redeeming their Passbook e-gifts more quickly than plastic cards, so Passbook seems to be having an impact on the velocity of spend,” Cornfield says. “We need to do analysis to quantify what ‘more’ in ‘more quickly’ means, but the ability to get a consumer in store more quickly and redeem more quickly can have a significant impact for retailers.”

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