Blackhawk has acquired CashStar, the largest virtual gift card company that can provide eCommerce services to accept the consumer’s payment for the gift card while guaranteeing good funds to the merchant despite potential online fraud in the eCommerce channel, and has already integrated to most closed loop card processors:
“PLEASANTON, Calif. – Aug. 30, 2017 – Blackhawk Network, Inc., a global financial technology company (“Blackhawk”), announced today that it has acquired CashStar, Inc., a leading provider of gift card commerce solutions at the forefront of mobile payments and digital gifting innovation. The acquisition strengthens Blackhawk’s position in the emerging digital gift card market and establishes Blackhawk as a leading provider in the fast growing first-party digital gift card market. The first-party gift card market transaction dollar volume is estimated in excess of $100 billion with digital being the fastest-growing segment of that market.
CashStar’s commerce platform enables retailers to market, sell and distribute digital and plastic gift cards in the first-party digital card business, which is directly to consumers and businesses across a wide range of channels. With CashStar’s flexible platform, merchants can use digital and physical gift cards to engage consumers throughout the customer lifecycle, including marketing and promotions, sales and customer service. CashStar increases Blackhawk’s offerings and deepens merchant relationships, while extending Blackhawk’s strength in the third-party and incentives businesses to the large first-party market. In addition, the acquisition provides retailers and distributors with more powerful options in mobile and digital distribution—two of the fastest-growing gift card segments in the industry today.
“The acquisition strategically enhances Blackhawk’s ability to provide the right digital solutions to our partners to meet the changing needs of business customers and consumers,” said Talbott Roche, CEO and president of Blackhawk Network. “With the addition of CashStar, Blackhawk is now a leading provider in the fast growing first-party digital market. Also, with CashStar margins projected in the range of 25 percent to 30 percent for fiscal 2018, Blackhawk maintains its focus on margin expansion. Finally, Blackhawk remains committed to optimizing capital allocation to enhance shareholder returns and will continue to evaluate acquisition candidates as well as potential share repurchases in the future.”
Mercator has written widely on Gift Cards, including our 14 years of closed loop and open loop benchmarks, our review of the virtual gift card market, and a Snapshot of CashStar which together identifies the 2015 dollar load on closed loop gift cards at $85,702,791,000 of which $15,426,502,000 was loaded onto virtual cards. This move continues the consolidation of the prepaid market and likely puts Blackhawk into some merchants that utilize InComm as a distribution partner. Last week InComm picked up program management for Amex prepaid products that are distributed by Blackhawk, so there you go!
Overview by Tim Sloane,VP, Payments Innovation at Mercator Advisory Group
