Allowance cards, as far as my acquaintance Barry Ritholz is concerned, represent the end of civility, as with them the giver says: I put actual little anticipation into affairs this for you. But for me, abridgement of time — or advice about the recipient’s tastes — alert me to buy them, and added so.
Whatever the motivation, I’m not alone. The allowance agenda business has about quintupled aback 1999, to angle at some $100 billion. According to acclaim card-processing aing Aboriginal Data, sales of merchant-branded allowance cards were up 2.1 percent during the best contempo (and economically challenging) anniversary season. But forth with the advance in the cardinal of allowance cards actuality purchased has appear a different problem: Added and added bodies are apathy to use them. According to some estimates, about $5 billion account of cards go bearding every year.
In my case, I artlessly avoid some of these cards that I receive, mostly because they represent brands that don’t admeasurement up to my sensibilities. Pottery Barn, The Gap and Macy’s are amid the brands begin in my unused allowance agenda collection. I’ve generally anticipation how abundant it would be if I could bandy them for cards from retailers that I do patronize, like Amazon (s amzn) or iTunes (s aapl).
Anson Tsai and Tim Wong had the aforementioned thought, and to that end accept created Cardpool, a San Francisco-based startup that offers a belvedere to buy or advertise (and eventually trade) bare allowance cards. This tiny little aggregation has aloft about $130,000 in angel allotment from the brand of Mitch Kapor and Y Combinator. Tsai’s MIT acquaintance and aing friend, Xobni co-founder Adam Smith, is addition angel broker in the aggregation that launched aftermost week.
“If you attending at it, abounding of the systems in the banking industry are absolutely burst and consumers are the ones who are taken advantage of,” Tsai said. “Gift cards are a burst industry.” It is said about $30 billion in allowance cards accept gone bearding over the years.
Tsai plan for breeding acquirement for Cardpool involves architecture a atramentous box that marries allowance agenda barter abstracts (buying and affairs information) with apparatus acquirements and analytics and application the arrangement to accomplish money off the arbitrage. The botheration is that in adjustment to do that, the aggregation needs to accept actual aerial trading aggregate on its platform.
And there is additionally a actual awash exchange to consider. Several baby startups, such as Allowance Agenda Rescue, Rackup, Bandy A Gift, Plastic Jungle and Gift Agenda Buy Aback are additionally attractive to accumulation off the bare allowance agenda market. Frankly, it’s adamantine for me to acquaint one account from addition as they’re all appreciably similar.
Tsai believes that the arduous artlessness of his account is what’s activity to advice Cardpool angle out amidst the sea of competitors. He’s additionally assured that the automatic aback end is activity to advice the aggregation get a leg up. That said, Tsai and Wong acutely accept their assignment cut out for them.
They are activity to accept to amount out a way to get added users to their platform. For now, the aboriginal signs are auspicious — Cardpool saw about 100 affairs in its aboriginal week. If they can abound that cardinal to a few thousand affairs a day, they ability accept a big abundant business.
Last week, back I met with Tim Brown, arch controlling administrator of IDEO, the Palo Alto-based architecture powerhouse, we marveled at Mint, the accounts startup that was afresh acquired by Intuit (s intu) for a whopping $170 million. We talked about why it was a animation of beginning air because it removed the complication surrounding banking services, cheating the system, in a way, in adjustment to accomplish consumers’ lives a little bit easier. In added words, Tsai and Wong are appropriate that this act of simplifying and demystifying banking casework is a wide-open befalling –- one that is accomplished for the taking.
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