Acquisition of Mobile App Gyft by First Data Corporation

2014-07-31
Published : Jul-2014

First Data Corporation which is owned by Kohlberg Kravis Roberts, the private equity firm, announced that it would buy start-up, Gyft, founded in 2012 that lets people buy and use gift cards from their mobile devices. With this acquisition, First Data Corporation, a payment processing giant is hoping that virtual gift cards will aid its mission to return to profitability.

The acquisition by First Data is the latest effort to incorporate cutting-edge technologies into its offerings for business customers. First Data is a giant in traditional payment sectors, such as managing A.T.M.’s and processing credit card payments. However, the company is trying to add new services with a focus on mobile programs.

First Data brought Perka, which makes a customer loyalty app. Recently First Data also introduced a system for processing sales in stores known as Clover Station, which stemmed from an earlier acquisition. The changes are ultimately aimed at helping First Data’s bottom line.

First Data which K.K.R. acquired for $29 billion in 2007, in one of the largest leveraged buyouts affected in the financial crisis of 2008. As business struggled, the company’s debt increased. The company has turned in repeated losses and recently accepted a $3.5 billion infusion of capital, led by K.K.R.

First Data had reported a second-quarter loss of $35 million, narrower than the loss a year earlier.

Gyft is one of a number of start-ups betting that consumers will shift purchasing habits to their smartphones from their physical wallets. Gyft users can upload plastic gift cards to the application, which customers can use for sending cards or making purchases. This application also includes a loyalty program.

President of First Data, Guy Chiarello said that the same robust tool set deployed by big box retailers will be coming soon to small to mid-sized businesses, perfectly synched with their mission to offer innovative solutions to help their clients grow.

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