Qualcomm’s Firethorn Begins Rollout of Wireless Gift Card Ahead of Holiday Season
Three years ago, San Diego’s Qualcomm (NASDAQ: QCOM) paid $210 million in cash to acquire an Atlanta mobile banking startup called Firethorn Holdings. At the time, some commentaries emphasized that mobile banking in the United States was emerging at a snail’s pace. Even Firethorn founder Tripp Rackley told GigaOm last November, “It’s going to be a long time before mobile payments take off; there will be a lot of people trying to make that happen. But until we go into a grocery store and see people pulling phones out to pay, we won’t be there.”
This year, however, Qualcomm’s Firethorn is showing new signs of life, with a series of announcements that suggest the mobile commerce subsidiary has some big plans for the shopping season just over the horizon:
—In March, Qualcomm named a 25-year veteran of the financial services industry, Rocco Fabiano, as Firethorn president (replacing Rackley), saying he would provide strategic leadership as Firethorn expands into new markets.
—Firethorn said in early August it had signed American Apparel, the Los Angeles-based clothing manufacturer, to accept its “Swagg” mobile application in time for the 2010 holiday season. Swagg is a mobile application for smart phone users that enables shoppers to purchase a “virtual” gift card that can be stored, personalized, and exchanged on smartphones.
—Less than a week later, Firethorn disclosed a collaboration with Discover Financial Services (NYSE:[[tickerDFS]]) in which the Discover Network will provide core processing services for payment transactions when Firethorn’s Swagg customers use the service at certain merchants (such as American Apparel).
—Earlier this week, the florist retailer and gift shop, 1-800-Flowers.com (NASDAQ: FLWS), the world’s largest florist and gift shop, also signed on as a Swagg-participating merchant in what appears to be part of a recurring announcement tactic, calling attention to its “growing list” of participating merchants.
Taken together, the recent spate of announcements reflects the steps that a new bank payment card and transaction-processing network might take to establish itself. Instead of launching a credit card, though, Chip Fishburne, Firethorn’s vice president of financial and merchant services, says the mobile commerce subsidiary has initially focused its resources on building technology for an electronic gift card.
“Our whole concept is to eliminate plastic,” Fishburne told me by telephone recently. In developing its Swagg initiative, Fishburne says Firethorn also is addressing a common complaint among consumers, who grouse about balances that remain on the card and losing the card itself. Firethorn’s Swagg “gift card” consists of a 16-digit code that is stored on a smartphone and which can be transferred to a friend or relative, and makes it easier to offer loyalty-based programs to consumers.
“We’ve gotten a lot of consumer feedback, and everybody wants to get a deal,” Fishburne says. They really want offers that are relevant and targeted.”
Fishburne noted that the existing gift card industry has mushroomed into a multi-billion-dollar business in part because of the convenience of including a card with a birthday card, and other special occasions, such as weddings and Christmas. With an e-version of the card, however, Fishburne says users will have the ability to personalize their gift card with a text message, and eventually with a photo or video.
The application is designed for smartphones, and will be available initially through Apple’s iTunes and the Android marketplace. While Firethorn has a broad focus, Fishburne says the brand and promotion of the brand is initially focusing on the 18 to 35-year-olds who are most likely to adopt the technology—a strategy that is especially clear on the Swagg website. “It’s kind of got a cool, hip association with it,” Fishburne said. “We’re clearly anxious to get it out.”