The gift card portion of mobile wallets is growing quickly, with both Amazon and payment processor First Data entering the market, following closely on the heels of Google Wallet.

Gyft – which is being acquired by First Data – claims to have pioneered the use mobile to manage gift cards but it was Apple’s Passbook that really popularized the idea. In the past few years, numerous merchants have jumped on board, recognizing the potential to drive ongoing engagements with mobile users via gift cards.

“While it’s early days for Amazon, it is clear they believe enough in wallet to invest in it – specifically the non-payment side of mobile wallet,” said Yoni Solomon, product marketing manager at Vibes.

“This is a great opportunity for Amazon to test the ‘mobile wallet waters’ by rolling out a mobile wallet that’s not currently focused on payments – rather focused on ‘consumer-first’ content like gift and loyalty cards,” he said.

“From what we’ve seen, this is in high demand. According to data from Forrester, 50 percent of existing loyalty program members want mobile gift cards and reward certificates, and Amazon is responding to that request.”

First steps
While mobile payments have been slow to catch on with consumers and merchants, solutions providers see an opportunity with gift cards and loyalty to gain an understanding of how consumers are engaging with their devices and lay the ground work for potentially broader offerings down the road.

First Data’s research shows that electronic gift card sales grew 71 percent from 2012 to 2013. According to Mercator Advisory Group’s annual survey of retailers, virtual and mobile cards are gaining share rapidly in the near $100 billion U.S. gift card market, with retailers reporting that, on average, loads onto digital cards tripled from 2012 to 2013.

In mid-July, the Google Wallet app was updated to add the ability to manage gift cards and redeem them in stores. Users can add cards to their wallet by snapping a picture of them.
The app previously offered the ability to store loyalty cards and offers in addition to payments-related functionality.

Google Wallet now offers gift card management capabilities

Giving back
Yesterday, Blackhawk Network, a leading prepaid and payments network, said it has partnered with Amazon to offer new mobile wallet capabilities, including enabling users to store, redeem and lockup balances for gift cards for dozens of retailers and restaurants.

Users will be able to redeem their cards online or present them in-store on their phones.

The Amazon Wallet comes preloaded on the Amazon Fire smartphone and is available for Android phones on Google Play.

Gyft’s iPhone app

Also yesterday, First Data announced it has agreed to acquire the Gyft gift card mobile app, which lets users buy, send, manage and redeem gift cards from their smartphones. Gyft, which is available for both iPhone and Android devices, recently integrated its gift cards offerings with Google Wallet. The platform also boasts more than 200 retailers.

The deal means First Data’s more-than 300 national retail prepaid clients will have access to Gyft to expand their gift card programs.

Mobile convenience?
Mobile wallets for gift cards make sense because this gives consumers a way to insure they always have their cards available to use, as smartphones are kept nearby at all times while physical cards are often forgotten at home.

Amazon and First Data are steering clear of enabling mobile payments for the moment and instead focusing on enabling consumers to store and redeem gift cards, as there is stronger consumer demand for such services than enabling payments. However, these first steps could lay the groundwork for a broader mobile payments strategy once the market is more developed.

“Amazon will have some work to do around adoption,” Mr. Solomon said.

“The app will be available on their Fire phone, but that means they’ll need to really sell phones in order to spark wallet awareness and adoption,” he said.
“While it’ll also be available for Android phones, we’ve seen a strong and still-growing audience for Google Wallet, which addresses the payment and non-payment side of mobile wallet.”

Final Take
Chantal Tode is senior editor on Mobile Commerce Daily, New York