RegaloCard gets $7M to send gift cards via mobile phones
RegaloCard is announcing today a $7 million round of funding for a free, instant way to send gift cards from the US to friends or family in Latin America.
The service works like this: You buy a RegaloCard gift card — redeemable at certain retailers and restaurants in Latin America — here in the US. You provide the recipient’s mobile phone number, and they immediately receive a text message with a PIN number that can be used to redeem the amount on the card.
Considering the number of Latin American immigrants in the US who want to send money to family at home, it sounds like a service that could have real appeal. Transferring money internationally through PayPal or Western Union entails fees, and the RegaloCard service is free and fast. Since it’s a free service, it also means small amounts of money can be sent, which is somewhat pointless with PayPal and the like thanks to convenience charges.
But the service as it currently stands is quite limited. You can’t use it to send cash, and the company has deals with just a few retailers. You can only buy a card for a specific brand, like Burger King or Universo Celular. Unlike PayPal, which lets you just transfer money for any use, RegaloCards are truly gift cards, restricted to a particular retailer or brand, of which there are only a few right now.
Furthermore, supporting retailers require a hardware component on their end to cash in the gift cards, something that could prove difficult to roll out over a broad geographical area. Finally, the cards aren’t currently available widely in stores in the US.
The Doral, FL-based company has plans to expand on both ends — to make the cards available across more US cities and to partner with retailers in more Latin American countries. But that sounds like quite a massive scaling effort, and I wonder why they don’t instead pursue a more streamlined program of partnering with several large Latin American chains who’ll convert the cards simply to plain old cash for a small fee. I’ve contacted the company to find out where the service is currently available (on both ends) and to ask about how they plan to scale, and I’ll update here when I hear back from them.
The announced funding comes from Dublin Ventures and Kinsail Corporation.
