For Glacier Restaurants, Digital Gift Cards are a Mobile Appetizer

Glacier Restaurants, having examined the wide array of choices to tap mobile technology, has concluded that the best entry-level mobile transaction is the digital gift card.

The Whitefish, Mont.-based company, which operates brands throughout the Pacific Northwest, is adding digital gift cards, which require less of a financial investment than open-loop options such as Apple Pay. It's also less of a cultural change for patrons, who may be accustomed to using digital gift cards and coupons from Groupon, Amazon.com and other e-merchants.

"With an option that ties into our point of sale systems, we don't want to do it if it's not going to be easy for our staff or our guests," said Erica Terrell, director of marketing for the Glacier Restaurant Group. "It has to be completely streamlined."

Glacier is using gift card technology from Yiftee and Cayan, which support the ability to send gift cards via text, email or Twitter. For Cayan, which used to be called Merchant Warehouse, the Yiftee tie-in is part of a broader strategy to transform from a traditional merchant services reseller to a technology-focused company.

"We're looking for things that go beyond the conventional 'you present your wallet and make a payment,'" said Neil Axe, director of product management for value-added services at Cayan, which last year acquired Opticard to diversify its gift card offerings. "Our relationship with Yiftee allows us, in a white label way, to enable merchants to offer gift cards that can be send in real time in whatever venue works for the consumer."

Glacier has initially deployed the Yiftee/Cayan digital gift card system at MacKenzie River Pizza, a chain Glacier operates in its northwestern footprint.

By mixing in mobile devices and social media are designed, gift cards can become more casual and less tied to specific events or holidays—more of smaller and frequent way to say "thank you," said Terrell, adding the restaurant company will still sell plastic gift cards.

The digital card feature is personalized and branded to the restaurant and can be stored and redeemed on the consumer's mobile device.   

"It's a way to monetize the social channel and gives an opportunity to incentivize our consumers to purchase a gift card for a simple reason," Terrell said.

What's less simple is how to weave mobile technology into other transactions. "In the long term we have mobile payments in the pipeline but finding the right solution is the key," Terrell said.

There are lots of options for restaurants to add mobile payments, as well as digital gift card apps like Starbucks that also allow preordering. Loyalty programs can also be woven into payments apps.

But the new technology does come with an adjustment for merchants, and thus far contactless mobile payment options have not taken hold in a major way for consumers and businesses other than Starbucks, which accepts just over one in five U.S. in-store payments through its mobile app.

Digital gift cards do show some potential for broad adoption by both merchants and consumers. Writing for PaymentsSource, Timm Walsh, chair of the board of directors of the Retail Gift Card Association, noted 80% of consumers want the gift cards they buy to be easily redeemable online or in person based on the recipient's preference, according to research. Also, 98% of recipients redeem in a variety of channels, including in-store, online mobile or a combination of options.

"The [Yiftee/Cayan] option is a good introduction to other things on mobile," Terrell said.