Each year, Canadians spend billions of dollars on gift cards. Often, they go unused. Leif Baradoy wants to change that.

Back in July, Baradoy launched his Victoria, B.C.-based startup Kiind in the U.S. market. Last week, he brought the service home to Canada.

"Kiind is a way to send a digital gift card," he explains. "But you don't pay for it until someone actually uses it."

Buy now, pay later

Here's how it works. Let's say I want to buy you a gift card.

At the Kiind website, I can pick from a handful of gift cards I suspect you'll like (big names like iTunes and GAP, alongside cards from smaller, local retailers). On the receiving end, you get an email notification letting you know that I bought you a gift card.

But here's the thing: my credit card isn't charged until you actually use the gift card.

"What Kiind does is defer when the payment takes place to closer to the point of sale or transaction," Baradoy explains. "So that means you don't pay for it until the person is ready to use it."

Essentially, when I send you a gift card through Kiind, I'm not actually buying the gift card upfront. Rather, I'm offering to buy you a gift card. If you don't accept the offer, it goes "poof" after a set expiry date.

'There's more and more consumer protection laws making gift cards much more expensive and costly to manage.'- Leif Baradoy, Kiind

The advantage for gift-givers and gift-receivers is clear. But why would stores sign up? Don't retailers benefit from all those unused gift cards?

Not anymore, says Baradoy. "Gift cards used to be a huge cash cow for retailers. They would clear unclaimed gift cards as revenue rather quickly.

"Now, there's more and more consumer protection laws making gift cards much more expensive and costly to manage."

Indeed, in most parts of Canada there are now restrictions on gift card expiry dates.

"There's also tax implications for unclaimed gift cards that are making them more expensive as well," he says.

Today, unclaimed gift cards can be an accounting nightmare for retailers who are forced to keep liabilities on the books for extended periods.

"So retailers are actually very interested in what Kiind is doing," Baradoy says.

The quantified gift

Beyond Kiind's "buy now, pay later" model, the company is also bringing web-style analytics to the gift card market. For me, this the most interesting (and privacy-wise, potentially tricky) aspect of their business.

Because it's all digital, Kiind allows users to keep close tabs on the gift cards they give.

"We're able to tell you when somebody opened the [notification] email so you know that they got it," Baradoy says.

"We're able to tell you what gift they selected. And we'll also notify you when they've redeemed the gift so you know your gesture was appreciated and it didn't go to waste."

Baradoy says this tracking isn't made explicit to gift card recipients.

"No, there's no sort of warning that says someone's going to be notified," he says, adding that "to date, we haven't had any customers say that they would like that as an option."

To be fair, it's hard to ask to opt-out of tracking if you don't know you're being tracked in the first place. Personally, I wonder how recipients would feel if they knew their activity was being and reported back to gift-givers in this way.

"That's certainly something we would look at adding if our customers started mentioning that it's an option they would like."

I agree that it's interesting and potentially useful to know if and when somebody uses your gift. And avoiding wasted gift cards makes a lot of sense.

But gift-giving - especially holiday gift-giving - is already a highly-charged social interaction. How much should I spend on so-and-so? Did they like what I got them? Is it OK to regift this?

Now, we're talking about adding the ability to run reports on who uses your gifts, and create a potentially awkward information imbalance between gift-giver and recipient.

Beyond the technology, there's a hugely interesting social dimension to this. It's something Baradoy says he plans to keep in mind as he expands the service.

"We're very conscious of the behavioural elements of the system we've built."