March 2, 2009, 12:00 AM

Startup CashStar offers personalized online gift cards

Online consumers can choose from a variety of designs, add a personal message and choose the amount of the gift card, which is then e-mailed to the recipient. The retailer then can market to both the gift card buyer and the recipient.

CashStar Inc. publicly introduced today its online gift card service that allows consumers to send personalized virtual gift cards and enables retailers to market to both the card buyer and recipient.

The customer has been testing its hosted service with a handful of retailers, among them Gorham Bike and Ski, where consumers can choose from nine designs of a virtual gift card. The gift card is e-mailed to the recipient, who can use it in stores or online. The CashStar technology also allows consumers to upload their images, and for retailers to change designs with the seasons or to promote new products, says David Douglas Stone, cofounder and CEO of CashStar.

But the biggest benefit to retailers, Stone says, is that they can follow up the gift card purchase with additional offers. Whereas a store retailer may not know who purchases a plastic gift card and has no way of knowing the recipient, with the CashStar system the retailer can send both buyer and recipient additional offers. “It’s all online, all traceable and it provides another opportunity for engagement,” Stone says.

Among the early testers of the CashStar system was Chicago restaurant chain Uno Chicago Grill, which tried it out just before Christmas and found the virtual cards outsold the chain’s plastic cards by 131%, Stone says. Uno marketed the virtual cards online and through e-mail to the 500,000 members of its loyalty program.

The concept for CashStar was developed by Coupons Inc., which operates, and that company’s CEO, Steven Boal, is chairman of CashStar, Stone says. The two companies also have investors in common, he says. Stone says private equity firm Passport Capital LLC has invested $4 million in CashStar.

Stone most recently worked on Intel Capital’s mobile commerce team identifying applications for digital and mobile coupons. Earlier in his career he worked at credit card company American Express where he says he developed the American Express Gift Cheque.

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