Technology and Infrastructure - Technology Platforms for Gift Cards

Gift cards are a significant component of retail and digital commerce, offering both businesses and consumers flexible payment alternatives. To effectively manage and issue gift cards, various technology platforms are employed. In the ever-evolving landscape of e-commerce and fintech, understanding these platforms—from their providers to their security implications—is pivotal for retailers of all sizes aiming to enhance their customer experience while maintaining operational resilience.

What technology platforms are most commonly used to issue and manage gift cards?

Gift card platforms generally fall into two categories: proprietary and third-party systems. Proprietary platforms are custom-built by companies to meet their specific business needs, providing total control over features and integration. On the other hand, third-party platforms offer scalable solutions that can be quickly deployed, and these are often favored by both large enterprises and smaller retailers for their convenience and cost-effectiveness.

Are platforms usually proprietary or third-party?

Most companies utilize third-party platforms due to their flexibility and the breadth of features offered. These platforms come with the advantage of ongoing updates, customer support, and compliance with evolving regulations without requiring significant in-house resources. However, large retailers with specific needs and adequate technological resources may adopt or develop proprietary systems, especially if they require integration with existing internal systems and processes.

Which vendors dominate the industry?

The gift card industry sees significant participation from several key technology platform providers who offer comprehensive solutions. Major vendors include:

• Blackhawk Network: Known for providing a wide variety of consumer and corporate gift card solutions.
• InComm Payments: Offers payment technology and serves numerous retailers globally.
• Fiserv: Delivers financial technology services including gift card management solutions.
• Square: Provides an easy-to-use platform for small businesses, integrating gift card management with POS systems.
• Shopify: Offers online and physical gift card solutions integrated with its e-commerce platform.

These vendors provide a range of services that cater to businesses from small startups to large multinational enterprises.

Do smaller retailers use the same technology as enterprise issuers?

Smaller retailers often utilize the same technology platforms as larger enterprises, especially those available from third-party vendors like Square and Shopify, due to cost efficiency and ease of use. These platforms are scalable and offer packages designed to meet varying business sizes and needs. Larger enterprises might tailor their usage of these platforms or integrate additional proprietary elements to ensure their gift card programs are seamlessly incorporated into their internal systems.

What security certifications are required?

Gift card technology platforms must comply with several security certifications to ensure the safe processing and storage of transactions:

• PCI DSS (Payment Card Industry Data Security Standard): Ensures secure handling of cardholder information.
• EMVCo and EFTA: Sometimes involved for chip-enabled payment cards, though not directly related to typical gift card offerings.
• GDPR Compliance: Particularly for businesses operating within or with markets in the European Union, ensuring the protection of consumer data.
• SOC 1, SOC 2, and SOC 3 Certifications: These address controls relevant to financial reporting, trust service criteria such as security, availability, and confidentiality.

Are cloud-based solutions replacing on-premise systems?

There is a marked trend toward cloud-based solutions in the realm of gift card management technology. Cloud platforms offer advantages such as scalability, reduced IT overhead, improved security features, and real-time updates, which are increasingly appealing over traditional on-premise systems. While on-premise systems still have their place in businesses with specific regulatory or data sovereignty needs, the agility and cost-effectiveness of cloud solutions are leading more retailers to transition to these offerings.

Incorporating these systems effectively necessitates a strategic approach—from selecting the right vendors to ensuring compliance with security standards, while balancing cost and functional needs across various business sizes.

In Summary

The technology platforms for issuing and managing gift cards primarily involve third-party solutions that offer flexible, cost-efficient, and scalable services. Prominent vendors such as Blackhawk Network, InComm Payments, and others have established themselves as leaders in this space. Both small and large retailers often use these platforms, though larger enterprises may customize their systems or integrate them directly with proprietary solutions. Security compliance, particularly with standards like PCI DSS, is crucial for these platforms. Moreover, the shift toward cloud-based solutions continues as businesses seek greater agility and reduced operational complexities compared to traditional on-premise systems.