(Shutterstock)

(Shutterstock)

Flipping Gift Cards

Through cloud-based software, GiftCardBin turns consumers’ trash to treasure

Back Web Only Feb 24, 2016 By Russell Nichols

When it comes to gift-giving, you can’t go wrong with a gift card, right? Well, not exactly. Research shows that more than $1 billion in gift cards go unredeemed. Based in West Sacramento, GiftCardBin has been banking on that stat since 2008, buying and selling gift cards that might otherwise go to waste. (Like the $25 Starbucks card you probably have in your wallet right now.)

“A lot of times consumers hang onto them,” says Michelle Kille, vice president of GiftCardBin. “It might be a store you don’t like, or you forget to take it with you. By buying gift cards and selling them at a discount, GiftCardBin is taking them out of the hands of someone who doesn’t want them and putting them in the hands of someone who does, allowing our savvy customers to stretch their dollar.”

Recently recognized by Deloitte as one of the fastest-growing technology firms in Northern California, GiftCardBin thrives as a leader in the secondary gift card market. With a network of about 2,000 partners in the U.S. and 500 in Canada, the company uses cloud-based software to buy unused or unwanted gift cards through various financial service centers and resell them at a discount in an online marketplace with gift cards from more than 700 popular retailers.

Other companies offer similar exchange services, but GiftCardBin is the only one to offer a guaranteed buyback and personalized portal with fraud protection, Kille says. And fraud is prevalent in this industry. Typically, gift card fraud means someone sells a card, but keeps the card number or takes a picture to use it later — so they get the cash and the credit.

“That’s a really big problem,” Kille says. “The biggest focus for us has always been, how do we stop fraud. We built our portal around that, so now we have eight years of fraud analytics in our national fraud database. We track every person that sells a gift card, and if they trigger one of our fraud flags because we think they’re coming into the gift cards in a dishonest way, we ban them from our entire footprint. Having that focus has turned into a significant competitive advantage for us.”

To do this, GiftCardBin works with local law enforcement and promises to reimburse its partners for any losses from fraud. This was one of the selling points for Bob Frimet, owner of Kiosk Prepaid, a new money service business.

“They take the risk,” he says.

This year, Kiosk Prepaid will be rolling out fully functional unmanned kiosks at 1,000 locations nationwide. These machines will serve the “unbanked and underbanked” consumers, providing various financial services, such as selling and buying of gift cards. He decided to team up with GiftCardBin so customers will be able to insert unused gift cards and get cash (or credit) on the spot.

“We met at a trade show and I fell in love with the product,” Frimet says of GiftCardBin. “They are a small enough company to work with easily as opposed to a large company that doesn’t return calls or emails and can’t make decisions in timely fashion.”

With only 20 people on staff spread throughout the country, GiftCardBin is small. But with its recent Deloitte award, the company was grouped with industry titans like Twitter, Facebook and Tesla. The award represents a milestone for a company that has roots tracing back to a single check cashing store, Kille says. In the beginning, there was one employee in the storage room, answering phones and reaching out to other money service businesses (check cashing stores, pawn shops, etc.). Eventually, the company hired a developer to build the website. Now, thousands of stores across the country use the platform, Kille says.

Online reviews for GiftCardBin are mixed. On Yelp, the company has two out of five stars with some users praising the customer service and others crying, “Scam!” TopTenReviews ranked GiftCardBin eighth in the Gift Card Exchange category. The reviewer gave the company bad marks for not buying or selling electronic gift cards. (An editor’s note acknowledges that GiftCardBin now includes the option to purchase electronic gift cards. An updated review is forthcoming.)

Kille was brought on three years ago to run the day-to-day operations at GiftCardBin. She understands the ever-changing nature of the industry and identifies technology as a key driver. “We can collect all the gift cards in the world,” she says, “but if we don’t have people buying them, we’re out of business.”

To that end, she’s working to grow out the development team to figure out what other features to bring on the website and how to enhance the company’s social media presence. Logistically, she’s running two different businesses: one focused on buying cards and the other on selling cards. Each requires different strategies when it comes to marketing, networking and management. Although Kille says the GiftCardBin’s biggest competitor has always been market awareness, she expects the number of partners to double this year.

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