The next level of gift card bundled with blockchain

The next level of gift card bundled with blockchain

Blockchain
March 27, 2018 by Shree Sule
3202
Everyone’s bought or received a gift card at some point in their lives. Gift cards are very popular with merchants and consumers alike. They’re an excellent last minute gift for friends or family and used commonly for corporate rewards and incentives. From digital cards with codes that can be presented at a merchant store to
gift card bundled with blockchain

Everyone’s bought or received a gift card at some point in their lives. Gift cards are very popular with merchants and consumers alike. They’re an excellent last minute gift for friends or family and used commonly for corporate rewards and incentives. From digital cards with codes that can be presented at a merchant store to those that can be used at multiple retail locations. With solutions such as digital gift cards and Facebook gift cards, customers can send out gifts to friends and family instantaneously with the next level of gift card bundled with blockchain.

Rise of Gift cards:

The gift cards market in India is growing and today it’s approximately a Rs 3,000-crore market of the customer engagements across 100+ power brands in 20 consumption categories.

Combining with the fact that India is becoming fastest startup economy and not surprising e-commerce being the most funded, the usage of gift cards through digital medium is on rise (as shown in the figure)

Example of digital card:

From digital cards with codes that can be presented at a merchant store to those that can be used at multiple retail locations. Last minute gifting is always a headache for people. With solutions such as digital gift cards and Facebook gift cards, customers can send out gifts to friends and family instantaneously

  • For the Facebook generation, QwikCilver (Indian market leader) has launched a Facebook app that lets people buy and send digital gift cards, without even knowing their Facebook friend’s email address. The receiver receives a notification about the gift. Once the person accepts the gift, he is taken to our portal where he receives the details about the digital gift card. It also offers digital gift cards with codes that can be presented at a merchant store and a transaction can take place in real time.
  • Titan, one of the clients for QwikCilver lets customers purchase digital gift cards. The card then can be presented at a Titan outlet by showing the mail on the mobile or by presenting a print out of the digital voucher.

Current Gift Cards Limitation:

A gift card unlike credit and debit cards is a singular instrument typically redeemed only with the merchant who issued it

Today the gift cards come in a specific denomination (500, 1000, etc.). For spending such amount the customer needs to make a buy exact of the amount specified.

Gift card comes with an enforced limit, e.g. if you carry a gift card worth Rs. 1000 you need to spend that in one transaction. The amount cant be broken nor be combined with other for a single transaction, and the residual amount is credited back to the card (which ends up unspent)

The gift card passes multiple hands (i.e. issuer -> distributer – > reseller – > buyer – > receiver) thus making its code easily compromised, results in a bad customer experience and financial loss for the issuing retailer. Retailers themselves estimate two major reasons for gift card losses are due to dishonest employees and counterfeit or skimmed cards.

Once a code is compromised, it might not be detected until redemption, and upon redemption. But upon detecting that a code was compromised at redemption, it is impossible to look back provably identify the party who broke the chain of trust.

Gift card platform based on blockchain technology

If we look at today’s gift card market we have three major actors participating in the entire flow;

1.Gift card issuer/ (‘s)

2.Customer

3.Merchant

One of the limitations that we face today with gift card is that it’s a singular instrument typically redeemed only with the merchant who issued it along with the security accept of it. Due to which the customer not only forced to redeem (within its validity) the card in a likely invite of favored product unavailability along with the fear of theft.

What if we combine all these players and put them on a secured platform well know for its security, transparency and immutability, this will not only help the multiple gift card issuers to partner giving the customer more flexibility an wider reach for shopping across different merchants but also reduces fraud related risks.

Security, transparency and immutability are three pillars of blockchain technology along with servicing to multiple distrusting partners, also making tracking of customer purchases easy and can develop marketing campaigns around it

Proposed solution

The solution will provide a consumer wallet which will contain all gift cards (preloaded with tokens*) irrespective of issuers or merchants

As shown in the figure, multiple gift cards assigned to the customer will be collated and shown a single balance.

Once the customer registers an unique identity is generated for him/ her and stored. Going forward all the gift cards purchased/ transferred to the customer will be linked to this identity. This application will serve as a one stop shop for all the customers gift cards.

Process Flow

Step 1: The gift cards are loaded into the customer’s wallet

Step 2: To utilize the gift card the customer present these cards to the merchant(instead of carrying multiple cards, the wallet serves as a one stop shop). The wallet provides the customer to carry out the transactions at any partnered merchant (giving the customer more flexibility and wider reach for shopping across different partners)

Step 3: At day end, the partners will carry out the settlement between themselves

Consider the following example;

Mentioned below is snapshot of the customers wallet, which shows 3 cards and the opening balance

Lets assume that the customer spends around 2000 worth of gift card money to purchase movie tickets from bookmyshow.

Following transaction will take place;

  1. Customer wallet will be debited with 2000 (“Entry 1”)
  2. Bookmyshow vendor will be credited with 2000 (“Entry 1”)
  3. All the partners ledgers will be updated with this balance
  4. Reconciliation will take place at days end and the partners will carry out balance adjustment with each other.

In the above example, bookmyshow will carry out the necessary settlement with its partners (“Entry 2” as shown in the figure)

Conclusion: Features & Customer Benefits on the blockchain based wallet

  • Unique customer identity to which all the cards are linked, acting as a one stop shop for all the gift cards, thus eliminating the need of multiple cards or multiple card accounts.
  • Giving the customer more flexibility an wider reach for shopping across different partners
  • Add your existing Physical Cards to your account and use them like digital gift cards, thus eliminating the need to carry any physical Gift Cards
  • Transfer amount to someone else’s account or transfer an entire gift card to another user without having to be with them in person
  • Reloading gift cards.
  • Shop and use from the comfort of a Mobile Device.
  • All your Gift/ loyalty program cards are in your Mobile Device.
  • Know your updated Gift Card Balance, Transaction History etc. within the app.
  • Reduced the cost taken to issue a gift card with a level of security equivalent to credit cards.
  • Merchants attract customers with particular offers designed to match consumers persona
  • Ultimately, intelligent wallets will be able to connect to marketplaces, identify arbitrage opportunities and perform in the background complex chains of trade that maximizes the consumer’s purchasing power without compromising their privacy or control.

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