GCN Founder, Matt Davies, featured in What's Next in Payments and Commerce E-Book. In 2016, several trends in the mobile payment space made waves for gift cards. As we move into 2017, some of the more interesting trends and options for mobile wallet initiatives are now being paved by this branded prepaid vehicle.
The new options, incentives and programs that emerged in the mobile payment space this past year are still so new that no standard yet exists as the goto for mobile payments. As we move forward, it’s clear more advancements and comprehensive solutions will emerge in this space. Gift cards stand strategically poised to pave the way for the mobile wallet space in terms of setting value trends.
Chicago startup ‘raise’-es the bar for gift card reselling. By Adam Perrotta, Associate Editor
When consumers receive gift cards to a brand or merchant they aren’t particularly interested in, the cards often wind up sitting unused in a wallet—be it the physical or mobile variety. And when gift cards go unredeemed, it’s not just the cardholder who loses. The brand or merchant also misses out on valuable in-store or online shopping traffic, not to mention the accounting issues stemming from breakage.
Chicago-based startup Raise offers a simple fix. The company’s online gift card marketplace enables holders of unwanted digital or physical gift cards to resell the cards to consumers who want to use them. Gift card exchanges aren’t new, but the key here is that the cards are sold at a discount—a $100 card might cost $85—so buyers can get more bang for their buck—essentially giving themselves a “raise.” And by incorporating the mobile channel, the platform enables consumers to easily purchase and redeem e-gift cards right from their smartphones, essentially turning unwanted e-gifts into a convenient and useful form of digital currency.
Company founder George Bousis became interested in gift cards in 2010, when he was tasked with developing a loyalty program for his family’s grocery store. A 2009 Federal Reserve rule as a result of the CARD Act prevents gift cards from expiring for at least five years from the date of issuance, extending the lifespan of unused cards for resale. “The law change for gift card expiration dates made gift cards more relevant for consumers because they had longer shelf life. And digital wallets and marketplaces were expanding with each new update to our smartphones,” Bousis recalls. “I saw an opportunity for consumers to be able to use gift cards as a new type of currency inside the mobile payments ecosystem.”
Getting to Know Raise
Marketplace Names: Raise, Raise Marketplace Location: Chicago Organized and Open for Business: 2013 Line of Business: Gift card marketplace Secret Sauce: Connecting buyers and sellers of gift cards via easy to use online marketplace that enables consumers to turn cards into digital cash. Founders: George Bousis Funding: More than $87 million in funding from investors including Accel, Bessemer Venture Partners and New Enterprise Associates. Ownership: Private Something You Might Not Expect: Company founder George Bousis made a living as a professional video gamer as a teenager. Raise’s Fast Rise Bousis launched Raise in early 2013 with 10 employees in a small office located in Chicago’s River North neighborhood. From there, the company has since grown to more than 250 employees operating out of an office in Downtown Chicago’s Loop district. The company has received more than $87 million in funding to date and has produced over $500 million in revenue. The New York Times listed the company as one of the 50 startups that could reach a valuation of $1 billion, while Bousis himself was named to Forbes’ 30 Under 30 list for in the consumer technology category. In June 2016, Raise bolstered its platform by acquiring New York-based Slide, which provides digital gift card management services, and announced plans for a New York office.
Discounts and Data The Raise gift card marketplace enables consumers to search for gift cards using criteria such as brand, product category, discount percentage or date listed. Each listing displays the full value of the gift card, the seller’s asking price, and the percentage of money the purchaser will save. Raise connects the buyer and seller, with physical gift cards shipped by mail for in-store redemption, and e-gift cards transferred electronically into the buyer’s Raise account for online or mobile redemption. Raise keeps a 15 percent cut of each transaction, offering a one-year money-back guarantee on card balances to ensure buyers receive purchased cards, and that advertised balances are accurate. The platform also offers rewards for signing up and referring new users.
Meanwhile, Raise’s position between sellers and buyers of gift cards for more than 3,000 brands means the company has access to valuable data about shopping behavior, including what brands are particularly popular or often sold, what combinations of brands are often purchased together and what brands’ cards are often dumped in favor of those of competitors. With retailers placing a premium on this type of shopping behavior, Bousis predicts revenue generated by its data will become a major portion of the company’s business in the years ahead. And while physical gift cards are a component of the Raise market, Bousis envisions an entirely digital future—one in which Raise is well-positioned to thrive. “We enable users to transform physical gift cards into electronic currency that they can use straight from their mobile device.” he notes. “The maturation of the mobile payments ecosystem makes our platform more and more relevant.