SparkBase

In 2004 Gift Cards were known, but only starting to get popular. In 2005 it was all the rage. In 2006 I don’ think I got anything BUT gift cards. 2007 saw the market double yet again. Is there any end in sight? The short answer: Yes, and no. Let’s explore!

It’s hard to find a big-box retailer that doesn’t take gift cards. In fact, it’s getting hard to find a small retailer that doesn’t take them either. This means that retailers are starting to see the benefit to “Going Plastic” by using gift cards as a way to keep customers. The benefits of having up to 18% breakage is undeniable. This is often the determining factor from the retailers we talk to. There are several small-town merchants on the SparkBase network that have more than $50,000 in card balances that haven’t been used in 2+ years. What are the odds of the customers coming in to use that money after 2 years?

On the flip-side, the number of merchants that are available to sign-up as new customers is starting to wane. 3 years ago, only 5%-10% of the small “Mom & Pop” businesses in the US had a Gift Card program. That number is starting to shrink on a monthly basis as Credit Card ISOs push Gift Cards as a merchant retention tool. This model is simple. Give the program to the merchant for free, and if they ever leave your Credit Card processing, you still have a hook into the merchant. It’s easy to move your Credit Card processing, it’s almost impossible to move your Gift Card processing.

A merchant’s inability to move the Gift Card transactions between multiple companies isn’t a bad thing though. When a merchant signs up for a Gift Card program on the SparkBase network, they have the security of SparkBase behind them, even if they don’t know it. We work behind the scenes of the ISO to make sure that the latest terminals are supported, and the system remains up and running. If they were to go with one of our smaller competitors that only has a few hundred merchants, any number of things can go wrong and they could potentially be left with thousands of gift cards in the field, and no idea what the balances are.

What makes the “Great Gift Card Land Grab” so interesting to watch from this end isn’t seeing all the ISOs try to wrap their merchants into contracts, it’s seeing the diversity of businesses that are able to use Gift Cards. It’s also interesting that very few customers are ever displeased with their program. It’s a win-win for everyone.

SparkBase is pleased to announce that we’ve added yet another ISO to our family. This particular company resides on the west-coast and uses a specialty program to attract and grow their network of merchants. They expect to add 500-1,000 merchants before the end of the year, and hope to grow by another 3,000 in 2009.

About SparkBase:
SparkBase LLC. is a leading Stored Value datacenter for the processing of of ISO Private Label gift and loyalty card transactions to the merchant services community. Headquartered in Cleveland, Ohio, SparkBase processes millions of transactions annually, all behind the scenes of its customers. This offers a competitive advantage to the MLS and ISO market that may not be able to afford the costs associated with a datacenter of their own. Serving merchants nationwide, as well as 4 countries, SparkBase is positioned to be the growing standard for ASP modeled transaction reporting. SparkBase has grown by more than 150% annually since processing its first transaction in October of 2004. For more information, visit SparkBase.com

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