Chad Molleken, chief executive officer of AnyCard.
For the past year, shoppers in Toronto's trendy West Queen West neighbourhood have been able to buy their lattes, coats and kitchenware in dozens of stores using online gift cards designed specifically for the neighbourhood.
The e-gift card, advertised in store windows, is similar to those issued by malls: You buy it online and redeem it in the store of your choosing by mobile phone or an e-mail printout. The difference is that the West Queen West card gives you access to small, independent businesses.
Toronto's Eaton Centre mall "does $100,000 a day, or some number like that, for gift cards during December and the holidays," said Rob Sysak, the executive director of the West Queen West business improvement area. "I always thought, 'West Queen West – we're like an outdoor mall, so how we could get that?'"
Cue AnyCard, the digital startup behind the West Queen West card, as well as similar programs in Guelph and Edmonton. The company, founded two years ago in Regina, built its business model on democratizing Canada's $8-billion gift-card market, making cards available to small businesses and neighbourhoods.
AnyCard handles the technology side of buying and redeeming and takes an 8-per-cent cut of the sale. All businesses have to do is add an AnyCard button to their website and a button in their point-of-sale system.
"Consumers are looking to buy online today … yet so often when I visit a business's website, they're not even promoting their gift cards," said Chad Molleken, chief executive officer of AnyCard. "We give them an easy way to start creating an instant revenue channel. Gift cards mean cash in the bank."
The idea for AnyCard came to co-founder and chairman Kirby Kazeil as a way to boost gift-card sales at his own business, Suds Full Service Car Wash in Regina, and to reduce the hassle of delivering them to customers.
"Especially at Christmas time or Father's Day, we had a real spike in sales," said Mr. Kazeil, who started developing the online gift-card system four years ago with programmer Chad Cardiff, now AnyCard's chief technology officer. "People would telephone in and you'd have to take their information over the phone, and run their credit card through."
Then came the nuisance and cost of packing and sending the card, said Mr. Kazeil. The online system made the process faster, easier and cheaper on his end, and more convenient for Suds's customers. Figuring the software would have broader appeal for small businesses, Mr. Kazeil helped launch AnyCard in 2014 with Mr. Molleken.
Two years on, AnyCard is used by about 600 businesses across the country.
Distillery Restaurants Corp. in Toronto, which runs four restaurants in the Distillery District, has seen sales of gift cards quadruple over the past year using AnyCard, according to Rik Ocvirk, the company's director of operations.
Before signing with AnyCard, Distillery sold about $10,000 worth of gift cards annually. With AnyCard, sales have jumped to $40,000 so far this year, he said.
"Is it worth a little bit of points off the top?" he said, referring to the 8-per-cent cut taken by AnyCard. "Sure it is."
AnyCard has also captured the imagination of business people looking for ways to promote their neighbourhoods, like Mr. Sysak of the West Queen West BIA. Having an e-gift card makes it easier to compete with malls, he said, especially for holiday shopping. "For brick and mortar [small businesses] to keep going ... you have to be an experience. But you also have to be convenient."
Having a neighbourhood gift card also makes it easier to run promotional campaigns, said Mr. Sysak. Where his BIA used to give away cash and hope people would spend it in area stores, it can now give away cards that can be spent only with BIA members.
The West Queen West BIA also covers the AnyCard fee – which has, in any case, been waived for the first several years, as long as the BIA gives away a certain number of promotional cards. So business members receive the full amount of money paid for the cards.
AnyCard is also drawing interest from companies such as Aimia Inc., parent company of the loyalty program Aeroplan, looking to diversify their offerings.
Starting in November, Aeroplan users in Toronto will be able to redeem their points for e-gift cards from West Queen West merchants and Distillery Restaurants Corp. and a handful of other restaurants in Toronto. In the past, Aeroplan has given members access to gift cards from big restaurant chains such as The Keg, but not independent outlets.
"What our product enables small and medium-size businesses to do is to compete at the same level these big-box players compete at," said Mr. Kirby. "When I can offer the same product ... as a national player does, that keeps you competitive."