Lyft to sell gift cards at Starbucks coffee shops

Lyft to sell $20 gift cards at Starbucks

Lyft is going analog.

The app is doing something that no other U.S. ride-hailing company has done before: It will sell gift cards.

The company told CNBC it will begin selling $20 cards at participating Starbucks shops starting this week.

"The partnership, we think, can help us not only reach new people, which is a huge goal of ours, but also get more people to take Lyft more frequently," said Oliver Hsiang, Lyft's vice president of partnerships.

The promotion comes as Lyft tries to boost its growth and potentially gain market share from faster-growing rival Uber. Lyft told investors recently that July was a record month for several metrics, including the number of rides it provided, the number of new passengers and drivers, and active passengers and drivers, according to a report in Recode.

Lyft has partnered with Starbucks before. Last year, it provided ride services for baristas and offered perks to Lyft drivers and Starbucks reward program members.

To entice riders and coffee drinkers to purchase these new gift cards, customers will receive a $5 Starbucks gift card for each Lyft gift card purchased. In addition, people who sign up for Lyft and link their Starbucks account in the app will receive 125 stars, or the equivalent of a free coffee.

If that wasn't enough, riders will also earn five stars toward free food and drinks at the coffee chain if they catch a ride between 5 a.m. and 10 a.m. Monday through Friday — at least for the next few months, as the offer is for a limited-time only.

Hsiang said goal for the app is to "cross-pollinate" Lyft riders and Starbucks coffee drinkers to bolster both companies' foot traffic.

"There are lots and lots of Starbucks stores in the cities that Lyft operates, and we know that people are taking Lyft rides to and from these locations," he said. "In fact, Starbucks was the number one most-visited coffee shop for us last year."

But, why is a company with a digital platform using traditional gift cards? It's all part of Lyft's strategy, said Hsiang.

"The gift cards allow us to get in front of a lot of people who may not be familiar with Lyft, or they can get in front of people who want to gift Lyft to other people," Hsiang said. "What we have learned is that there are lots of people who still prefer to transact through the physical card."

For those who prefer the digital realm, consumers can give referral codes to friends and family, inviting them to join the app and receive a free ride.

(CORRECTION: The Lyft gift cards are available this week at Starbucks.)