Tango Tackles Employee Rewards with Digital Gift Card Distribution

Tango Card is pitching its online gift card platform as a way to let big companies provide small-dollar awards to their employees.

Business incentive programs "are a lot harder than they need to be today," says David Leeds, founder and CEO of Tango Card. "We've created a really simple elegant way to connect into a modern rewards program that can be customized to business' needs."

Enterprise rewards programs cost businesses about $50 billion a year overall, Leeds says. He did not have a direct comparison for what that figure would be under Tango's pricing, but items such as customer service and card delivery are free to Tango clients whereas companies would likely pay for such services with conventional rewards programs, he says.

Tango Card makes a commission on the sale when the gift cards are used, between a 5% and 50% margin depending on the brand. The company also allows consumers to take gift-card funds out in cash. It charges 7% of the face value of the card for doing so. 

"This turns into a higher level of engagement from employees … and [businesses] can do it with a budget that makes sense for them," Leeds says.

While in the past companies would reward outcomes, such as working at a company for many years, today businesses are incentivizing behavior, says Leeds.

"Rewards programs are being done very differently today," he says. "We're now making it so that instead of the do-it-yourself approach which takes energy and has fees…now you can do all this stuff through software."

The gift card industry has grown in recent years, especially as consumers use the cards to help them shop online.

"Gift cards as an incentive or a 'thank you' is not a new idea," says Arkady Fridman, a senior analyst at the Aite Group. But especially for large companies that don't know their employees well, Tango Card offers the ability to reward employees without having to know where they shop, he says.

"There's a push to put the consumer in control of these things," Fridman says. "This is one way to do so by making it easy for the person providing the gift and provide [choice] for the consumer."

While Tango Card doesn't focus on consumers, a plethora of gift card and e-gifting companies have sprung up in this space, including Gyft, a mobile gift card company that recently started accepting Bitcoin, and Blackhawk Network, which joined Monitise this week to bring mobile gift cards to traditional financial institutions.

Leeds says Tango Card's enterprise competition is split into three categories: the do-it-yourselfers; the multi-billion dollar companies; and the open-loop products, such as Visa and MasterCard.

Currently the company has about 25 top merchants and 10 non-profit organizations that use the platform, plus a range of other companies that Tango Card builds special promotions and sweepstakes for, says Leeds. One of the company's biggest customers is Bing, Microsoft's Web search engine.

In 2012, Plink LLC began working with Tango Card to offer consumers virtual gift cards and expand its customer base beyond Facebook users. Plink, a Denver-based startup, offers Facebook credits, iTunes gift cards and other online currencies as rewards for eating and shopping at specific restaurants and stores. (Facebook has been phasing out Credits since last year, and has set Sept. 12 as the cutoff date for merchants that still use credits.)

At the end of April, Tango Card closed on a $4.1 million Series B round of funding to build out the "rewards as service" platform and expand its development team for several international projects the company is starting in the next couple years, Leeds says. Tango Card has already launched in Canada and Australia.