On Me has signed a five-year deal with Mastercard and secured $1.7 million in venture capital to build out its personalized digital gift card platform.
Unlike the traditional single-store gift card model, On Me’s platform centers each gift card around a particular interest or hobby. For example, a recipient could use a “Running, On Me” gift card at a select group of retailers like Nike, Adidas, or Reebok.
The all-digital cards aim to replicate the customizable experience consumers get on social media, allowing users to enhance their gifts with videos, photos, and GIFs.
“The offering from On Me highlights the convergence of two emerging trends in gift carding,” said Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research. “First, the shift to digital issuance, which Javelin projects will reach a 50/50 split with physical cards in the next four to six years. Second, the small but rapidly growing category of open-loop restricted authorization network cards.”
“These cards run through open-loop networks like Mastercard, but restrict use to a limited amount of redemption options,” he said. “In effect, the recipient gets a tailored gift card that can be used at a wider variety of options. Javelin projects the open-loop RAN segment to grow at a CAGR of 10% through 2028, as highlighted in my recent report.”
Recipient Satisfaction
The shift to digital cards can help reduce gift card fraud, which cost consumers $217 million last year, according to the Federal Trade Commission. On Me believes that using digital cards with two-factor authentication built in can mitigate some of these risks, and its platform will also leverage the on-device encryption used in mobile payments.
Gift cards are the most requested gift for a reason—they let recipients choose the gift they want. Expanding the number of retailers where a single gift card can be used is likely to enhance recipient satisfaction, as will the platform’s personalization features.
On Me currently offers over 70 interest-based digital gift cards, but the platform hopes to add new products centered around hobbies like skydiving, horseback riding, cooking, and wine tasting.
