(Updated with comment from First Data and Gyft)
It's not all that hard to envision a world without any physical money, is it? I mean, I personally only carry cash on me for emergencies or for small places that don't take credit cards and eventually those won't exist either, once we can pay for everything with our phones.
With payments quickly going mobile, payments companies are being forced to transition as well. That is why Gyft, which acts as a digital wallet for a user's gift cards, has now been purchased by payments giant First Data, it was revealed on Wednesday. No financial terms of the deal have been disclosed.
Through the purchase, First Data's more than 300 clients will gain access to Gyft, giving them a new distribution channel; one that is exclusively mobile. Through the acquisition, Gyft's tools will be added to First Data’s its touchscreen point-of-sale solution, Clover Station, while Gyft for SMBs will be added to the Clover App Marketplace.
By combining Gyft's mobile-first solution with First Data's reach, the deal will give retailers more ways to interact with their cutstomers, Mark Putman, senior vice president of Prepaid Solutions at First Data, told me in an interview.
"Being able to get an already built company, with a great name, and a great brand image, weighed heavily in our decision," Putman said. "Gyft gives our customers the ability to connect the dots to give them a complete payments lifecycle."
First Data simply didn’t have the expertise for integrating the same type of gift card interface that Gyft has.
"We really didn't have the customer interface, and we didn’t have the speed to market, so it was much easier to acquire a company with the skills and assets that we didn’t have at First Data," said Putnam. "We wouldn’t be able to get that type of broad set of services doing it on our own."
Ultimately, the acquisition of Gyft fits into First Data's broader strategy, including the 2013 purchase of Clover.
"Gyft and loyalty go hand in hand, much like Clover. They all sit very well together, and help provide a broad set of seamless offerings."
For Gyft, being purchased gives the company a bigger reach, and access to more customers, CJ MacDonald co-founder and COO of Gyft, told me.
"What this ultimately does is expand the opportunity for what we set out to do when we launched. First Data is a leading provider in the payments space and they've got such ,massive reach and distribution," he said. "A lot of consumers might not know the name First Data but if you walked into local merchant, they are the back-end system for payments."
Gyft currently works with more than 200 retailers, including Sears, Groupon, CVS, Crate&Barrel, ToysRUs, GameStop, JC Penny, Burger King, Regal and the Gap. While there may be some overlap with First Data's 300 clients, MacDonald expects the deal to be a boon for Gyft.
"We’ve done a pretty good job, but this gives us a whole other scale and reach. At the end of the day, for providing a great user experience, content is extremely important. If a customer wants to buy through retailer, but we don’t offer thatparticular brand, it reflects poorly on us, and that customer might not come back," said MaccDonald. "We are extremely excited about future growth opportunites from working with the First Daata team to exxpand our reach and merchant partnerships."
Founded in 2012, Gyft allows users to send and receive digital gift cards on their iPhone, and even upload physical gift cards by entering the gift card number. The digitized gift cards can then be redeemed in-store or online. Users can track their balances, and safely store their card info with password protection. Cards are stored on the cloud, so that they can be accessed from any browser.
In a blog post, Vinny Lingham, CEO of Gyft, said that the purchase would have no effect on its current users.
"What does this mean for you? Simply put: A better Gyft experience. Continue to use Gyft as you have been. The only changes that will take place are significant improvements on our platform such as more national retailers, faster balance checking across our brands and improved user experience," he wrote.
"I would like to reiterate that Gyft will continue to be the same innovative, nimble brand that you have come to expect and we will continue to accept all forms of payment. "
The San Francisco-based Gyft had raised $6.25 million, most recently picking up a $5 million round in September of last year. Investors in the company included A-Grade Investments, Social+Capital Partnership, Karlin Ventures, Haas Portman and David O. Sacks.
(Image source: bitcoinblogger.com)