Seeking Rapid Expansion in Growing E-Gift Card Market, InComm Snaps up Giftango

Atlanta-based InComm, a major provider of plastic gift card programs, will be gaining a bigger presence in the growing digital card market through its acquisition announced on Wednesday of Portland, Ore.-based Giftango Corp. Although both companies are involved in managing plastic and digital gift card programs for retailers, InComm had been a bigger player in the plastic card market while Giftango has stronger product offerings in the digital world, says Jeffrey Baker, executive vice president of mergers and acquisitions for InComm.

Baker says 7-year-old Giftango has a more robust platform for issuing e-gift cards, including offering features that InComm did not have, such as back-office management tools that provide transaction history and card balances.

Giftango also brings to InComm the ability to offer gift card distribution and redemption through mobile phones—also a feature InComm did not have. With mobile-phone programs, purchasers of gift cards can have digital cards sent to customers via a text message. Recipients can then print out an image of the card with a barcode on it and redeem that in a store. Or, the recipient can wave the barcode image on the phone’s screen directly over a barcode reader in a store to redeem the value.

The InComm-Giftango deal comes as the digital-card market is showing signs of picking up momentum. Hard numbers are hard to pin down, but the business has already attracted a raft of new players. The latest entrant is Square Inc., marketer of the iconic cubic card reader for smart phones, which said in December it will provide digital gift cards for its base of small-business users.

Baker says InComm wants to expand into the mobile world as a content provider to those technology companies that are developing mobile wallets. “We don’t want to be the wallet provider per se, we just want to control the content provided. We will work with all the major wallet companies and let them determine the direction this technology takes,” Baker says.

Baker says Giftango also brings a strong channel for offering gift cards for loyalty and incentive programs. Such programs include offerings such as Chase Loyalty, where customers can accrue loyalty points and then go online to request a plastic or virtual gift card as a reward. In those cases, customers typically use the cards themselves rather than give them as gifts.

And InComm was impressed with Giftango’s customer portfolio for offering e-gift cards. “Their portfolio has a strong fit with what we have done, with not a lot of overlap,” Baker says. Giftango manages more than 150 digital gift card programs through a network of 80 partner companies. While he declines to reveal numbers, Baker says InComm and Giftango combined will manage the gift card programs for hundreds of major retailers and service providers. Among major clients Giftango brings to the table are Burger King, Subway, and Apple’s iTunes.

Although Baker sees a lot of potential in the emerging digital card world, he believes there is still a lot of near-term growth in existing plastic gift card programs. “Our core distribution channel (plastic cards) is not going way. E-gifts just open up new channels. We expect rapid growth in this industry, but that is rapid growth off of a very small number today,” he says.

Terms of the deal were not disclosed. Giftango will become a wholly owned subsidiary of InComm and maintain its office in Portland.