By: Gigaom
Square Wallet offers gift cards with Passbook integration
Square is enabling gift cards for the first time, allowing its users to send presents to each other that can be redeemed at Square merchants. The system also works with Apple Passbook for iOS 6 users.

Square is getting into the gift cards market in time for the holidays and will have Apple Passbook (AAPL) integration for iOS 6 users. Now, users can send gift cards for merchants that accept Square Wallet, just like Starbucks (SBUX) app users.

Here’s how it works:

Users who upgrade to Square Wallet 2.5 for iOS and Android (GOOG) find a merchant they like in the Square Directory in their mobile app. They can then choose to send a gift card to a friend for that business via email. Users can send cards for $20, $50, $100 or set their own amount. After including an optional note and choosing an envelope design, they can set which day they want to deliver the gift card.

Square, gift cardsThe card is redeemed via email and is included in a recipient’s Square Wallet application. When a card holder goes to redeem it, the card is accepted through the Wallet app or they flash the card’s QR code to a merchant, who scans it with their camera on their phone or tablet. Merchants will also need to update to Square Register 2.5 to handle the new gift cards.

For iOS users, the interesting option is to redeem the gift cards via Passbook. The platform allows businesses to integrate tickets, coupons, boarding passes and gift cards, which show up automatically on the lock-screen when they’re ready for use. I haven’t been able to try this out but will update with some thoughts later.

Square doesn’t appear to be using Passbook to enable all payments, but the integration of gift cards is an interesting move. Starbucks currently integrates with Passbook and allows you to have your Starbucks card appear on your lock screen when going to favorite Starbucks locations so it’s ready for payment when you enter the store.

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