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Gyft, the virtual gift card service founded by South African-born entrepreneur Vinny Lingham has been acquired by First Data, a big player in the payment technology and services space.
Neither party has disclosed the terms of deal, although early Gyft investors have expressed pleasure at the deal. Karlin Ventures managing director TX Zhuo told Pandodaily that it was “a great outcome for everybody involved.”
Sources close to the acquisition meanwhile said that the deal was larger than the US$54-million it paid for mobile point of sales startup Clover in Devember 2012, but fell shy of the US$100-million mark.
The startup, which has been around for a couple of years now, has done a pretty good job of raising funding to date, with money coming from the likes of Google Ventures, A-Grade Investments, The Social+Capital Partnership, Karlin Ventures, Haas Portman and angel investor and CEO of Yammer David O Sacks.
In an official blog post announcing the acquisition, Lingham writes that the deal should not affect the experience of everyday Gyft users:
“I would like to reiterate that Gyft will continue to be the same innovative, nimble brand that you have come to expect and we will continue to accept all forms of payment”.
“The only changes that will take place,” he writes, “are significant improvements on our platform such as more national retailers, faster balance checking across our brands and improved user experience”.
For its part, First Data says that it was drawn to Gyft because of the “mutual benefit it provides to both consumers and merchants”.
First Data also points to Gyft’s loyal, young and growing database as playing a role in pushing it to buy the mobile gift card service.
It also seems to feel that Gyft is on the crest of a rising wave in the mobile commerce space, pointing to its own research, which shows that electronic gift card sales grew 71% from 2012 to 2013.
It also points to the Mercator Advisory Group’s annual survey of retailers which shows that virtual and mobile cards are gaining share rapidly in the near US$100-billion US gift card market.
As PandoDaily points out First Data has recently been making some serious moves away from its traditional physical point of sale base and toward mobile point of sale.
“Gyft, with its mobile gifting platform, and First Data, with its global scale and distribution network, together will accelerate the growth of virtual prepaid with powerful new tools for merchants of all sizes to deepen their relationships with their customers,” said Guy Chiarello, president, First Data. “This means that the same robust toolset deployed by big box retailers will be coming soon to small- to mid-sized businesses, perfectly synched with our mission to offer innovative solutions to help our clients grow.”
Perhaps most telling though is the fact that First Data felt compelled to point out that Gyft operates as a comprehensive engine for bulk gift card sales that can be used for incentive marketing and promotions by employers and businesses.
It seems likely that the Gyft team will remain intact once the deal goes through, with Lingham saying that that company does not “see this as an exit. We see this as a continuation of what we’re already doing but with a lot more resources.”
The acquisition is expected to be completed next month.