Gyft opened its doors in 2012 with a focus on transforming plastic gift cards into their much more convenient–and transferable–digital equivalents. Now, it’s turned its attention to the gaming industry that rewards players with points, rewards, credits and coins. But when players want to cash out, gamers and others need to avoid high transaction costs, as CEO Vinny Lingham told Sarah Perez of Techcrunch,
“A lot of developers out there have points, rewards, and unredeemed credits, and they want to offer a way for their users to cash out those points or credits,” … He suggests that Gyft is a better alternative for these developers than using bill-pay systems that charge fees for transactions.”
It’s easy to see how Gyft strategy fits with its first API partner Yappem, a social network site that rewards consumers for posting about their purchases. Yappem’s rewards, in the form of coins, can be traded with other consumers for information/feedback on goods under consideration for purchase, and can also be redeemed for gift cards to favorite retailers.
As Alex Konrad described in Forbes, Gyft could be sitting on something big, a method for hypercharging the usefulness of often unused cards–to retailers as well as consumers:
“Electronic gift cards are only a $3 billion business today, or 2.7% of the total, but they’re growing fast. Retailers like them because they can target customers by location and send reminders that their cards have been sitting idle, says Gyft cofounder C.J. MacDonald.”
In the Techcrunch article quoted above, Perez concurs with Konrad that Gyft has a powerful opportunity: cashing out these points can create small gift cards with a great payoff for retailers. As she notes, Gyft
“…has grown the stored value of its on-file gift cards to $5 million since launch six months ago. The company has also begun targeting users with free gift cards offering a small amount (e.g. $5 at Gap) to encourage users to spend with Gyft’s retailer partners. In one case, 20 percent of those who opened the card went in-store to make a purchase with the brick-and-mortar retailer. And the average spend was 4 to 5 times higher than the card’s value, Lingham says.”
Spreading the system through games will be critical to getting consumers familiar with the service. Access to the API is by application.