Gift Card Exchange Gets Physical with Coinstar’s Alula Kiosks (Jan. 8, 2013)
Jan. 8, 2013
Coinstar Inc. is introducing a new dimension to the secondary gift card market with Alula, a kiosk service it’s piloting in some supermarkets that enables consumers to immediately convert unused gift cards into cash. The service cuts out steps and speeds up the process of selling unused gift cards through various online operators in the secondary gift card market, according to the company. Plastic Jungle and Cardpool are among top players that buy and resell unused consumer gift cards. But Alula, a Coinstar division, has a few key limitations, observers note, including the fact that customers must have a Visa or MasterCard in order to participate in the pilot, taking place in several dozen supermarkets in Ohio, Illinois and Arizona.
Consumers may insert any of 170 different types of gift cards into Alula’s bright-yellow kiosks and then choose to accept offers ranging from 60 percent to 85 percent of the face value of their gift card. Consumers that accept the offer receive a voucher they may exchange for cash at the checkout lane of the same store on the same day they receive the voucher. Alula then resells the cards it receives from consumers through various secondary gift card exchanges and resellers online that the company declined to disclose. To help prevent fraud, Alula requires customers exchanging gift cards to provide a Visa or MasterCard as an identification token. “A consumer’s credit card will not be charged,” an Alula spokesperson tells Paybefore.
But requiring a credit card could be an obstacle for many cash-strapped consumers, Madeline Aufseeser, a senior analyst with Aite Group, tells Paybefore. “Creating awareness for gift card redemption programs is great, however, in the universe of people with unused gift cards, not everyone has a Visa or Mastercard,” she says, noting that some consumers also might find it confusing to insert a credit card when redeeming a gift card. And, persuading supermarkets to give up limited floor space also could be a challenge. Adoption “will depend on how profitable it is for supermarkets,” Aufseeser says.
Coinstar emphasizes that so far Alula is in the experimentation phase. “The pilot process enables us to learn a lot about what solutions make the most sense for our retailer partners and their customers … we have not finalized the product offering or approach,” the spokesperson says.