Megan Kendrick, an editor in Phoenix, just discovered 12 plastic gift cards stashed in a drawer, dating as far back as 2003. The unspent balance topped $500. "I didn't realize we had as many as we did," Kendrick, 27, says.
Kendrick is in good company. U.S. households average five cards on hand with a total value of more than $100, according to financial services industry adviser Richard Crone. As many as 20 percent are never or only partially used, he says.
First Data (KKR), Qualcomm (QCOM) and Google (GOOG) are devising a remedy by promoting so-called virtual gift cards. These make it easier for consumers to send and redeem gifts, often in small amounts, by relying on e-mail, mobile phones, or a social-networking site. The cash value on virtual cards will reach $10 billion in the U.S. in 2015, up from less than $500 million last year, says consulting firm Aite Group.
That would benefit users such as Kendrick, as well as merchants, which often can't recognize revenue from gift cards until they are used. Increased gift-card redemptions would also bolster retailers' sales because cardholders typically spend 50 percent more than a card's value, says Crone, whose Crone Consulting is located in San Carlos, Calif.
"The whole gift-cards industry—it's broken right now," says Nicolas Baum, chief executive officer of GiftRocket, a virtual gift-card company that sends money to a mobile phone when the user enters a selected store. "We wanted to take what's bad about gift cards and throw it out the window."
Digital, Liquid, and Timely
Virtual gift cards differ from traditional plastic ones because they're sent digitally and can often be tailored to any value, including small, unrounded amounts. In some cases, they are delivered just as a shopper considers making a purchase.
The new wave in gift cards has drawn notice from venture capital firms, which have invested in startups such as Mountain View (Calif.)-based GiftRocket. The company uses a phone's global positioning system to find a recipient's location and then transmits the funds to their PayPal (EBAY) account. GiftRocket has raised $170,000 from investors Start Fund and Y Combinator, Baum says.
Some services will send a gift card for a particular merchant to recipients who have told social media friends they're headed to that location. Atlanta-based First Data last year began letting consumers send gifts of Cold Stone Creamery ice cream cones via Facebook's social networking site.
"It's going to change the way consumers are giving gifts from an occasion to every day or every week," Sarah Owen, a vice-president at First Data, says. "We'll really see transaction volume pick up over the next five years."
Kendrick is in good company. U.S. households average five cards on hand with a total value of more than $100, according to financial services industry adviser Richard Crone. As many as 20 percent are never or only partially used, he says.
First Data (KKR), Qualcomm (QCOM) and Google (GOOG) are devising a remedy by promoting so-called virtual gift cards. These make it easier for consumers to send and redeem gifts, often in small amounts, by relying on e-mail, mobile phones, or a social-networking site. The cash value on virtual cards will reach $10 billion in the U.S. in 2015, up from less than $500 million last year, says consulting firm Aite Group.
That would benefit users such as Kendrick, as well as merchants, which often can't recognize revenue from gift cards until they are used. Increased gift-card redemptions would also bolster retailers' sales because cardholders typically spend 50 percent more than a card's value, says Crone, whose Crone Consulting is located in San Carlos, Calif.
"The whole gift-cards industry—it's broken right now," says Nicolas Baum, chief executive officer of GiftRocket, a virtual gift-card company that sends money to a mobile phone when the user enters a selected store. "We wanted to take what's bad about gift cards and throw it out the window."
Digital, Liquid, and Timely
Virtual gift cards differ from traditional plastic ones because they're sent digitally and can often be tailored to any value, including small, unrounded amounts. In some cases, they are delivered just as a shopper considers making a purchase.
The new wave in gift cards has drawn notice from venture capital firms, which have invested in startups such as Mountain View (Calif.)-based GiftRocket. The company uses a phone's global positioning system to find a recipient's location and then transmits the funds to their PayPal (EBAY) account. GiftRocket has raised $170,000 from investors Start Fund and Y Combinator, Baum says.
Some services will send a gift card for a particular merchant to recipients who have told social media friends they're headed to that location. Atlanta-based First Data last year began letting consumers send gifts of Cold Stone Creamery ice cream cones via Facebook's social networking site.
"It's going to change the way consumers are giving gifts from an occasion to every day or every week," Sarah Owen, a vice-president at First Data, says. "We'll really see transaction volume pick up over the next five years."
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