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private key. Effectively, this is like using a different highly secure card number and PIN for each transaction.
2. Fragmentation. Gift card APIs critical to providing
an enhanced customer ex- perience are functionally limited and fragmented. Unlike credit and debit cards, which require a standard infrastructure among thou- sands of financial institutions and millions of merchants,
a gift card is a singular in- strument typically redeemed only with the merchant that issued it. This has created an environment in which a much wider variety of dissimilar gift card APIs coexist. As a result, consumers may only get up-to-date balance, trans- action history or real-time notifications for a limited
number of cards they transfer to their digital wallets.
Benefits Galore
It’s difficult to envision all the merchant and consumer benefits
of using blockchain. With the blockchain, merchants have the tools to “print” their own digital currencies, which likely will openly trade on secondary markets. They can use it to reward their best customers and attract new ones, to bolster their cash or practice better yield management. Merchants also can publish offers targeted to customers with particular assets.
For consumers, it means more flexibility, usability and value. Gift cards can be bought or re- loaded in any amount, instead
of in fixed denominations. Card balances can be reliably checked from any merchant in the world that’s adopted the blockchain.
Consumers also can add up all their gift card balances into one balance and transaction history, easily bought and sold instantly from issuing merchants or on secondary marketplaces with/for any other asset. Virtually any asset can be converted on the fly to any asset a merchant accepts.
Ultimately, intelligent wallets
will be able to connect to market- places, identify arbitrage oppor- tunities and perform operations in the background, such as complex chains of trade that maximize the consumers’ purchasing power without compromising their privacy or control.
Right now, the blockchain is
still in adolescence, transitioning from enfant terrible to mature platform. Many in the industry
do not fully understand the concept or its potential (people still argue about what to call it: “the Blockchain” or “a blockchain” or the “Internet of chains,” etc.).
It took many years for the Web
to go from research project to the way everyone does business. It will take many years for in- dustry participants to connect into this global, interoperable fiduciary network, but as it catches on, it will transform
the gift card marketplace.
Guillaume Lebleu is head of Gyft Block, the blockchain-based gift card platform developed by Gyft, a First Data subsidiary that specializes in mobile gift cards. He can be reached at giyom@gyft.com and @giyom.
volume 8 • fall 2015
blockchain won’t replace plastic
A physical medium, such as
plastic cards, will continue to be
an important element of gift giving, but the blockchain will give more flexibility and security to end users. For instance, customers will be able to buy gift card assets in a lump
sum and decide later how to split it into different physical cards at home. A recipient of a gift card also will be able to check quickly that the card
hasn’t been used yet and transfer its value to a digital wallet, emptying the original card in the process.
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