Square, a leader in mobile payments, today launched a gift card service tied to its Square Wallet program and that could be aimed at attracting some would-be Apple Passbook users.
The new service appears designed to let anyone purchase a gift card for friends or family at any of the more than 250,000 businesses nationwide that accept Square Wallet, an iOS andAndroid app that lets users pay automatically with their mobile device. The recipient would then redeem the value of the gift using Square Wallet on their own device.
The value of a service like this is that it avoids the use of physical gift cards and lets merchants that accept Square Wallet easily set up the transaction with Square Register, a system that lets them take credit cards, track sales and inventory, and generate analytics.
The gift card business is estimated to be worth $100 billion annually, yet tens of millions of dollars of such gifts expire every day, according to CouponTrade.com. Apple has recently attempted to get in on the gift card game by letting iOS 6 users store the cards in Passbook. Square is clearly hoping it can be the digital gift card service of choice for millions of iOS and Android users. The San Francisco startup has been developing more and more ways for users to pay. It started by providing merchants with plug-in dongles for iOS devices that let anyone take credit cards, and then launched Square Wallet and Square Register.
The company, which is already processing more than $10 billion in annualized transactions, also recently launched a partnership that lets customers pay using Square Wallet at more than 7,000 Starbucks outlets in the United States.
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