As a former brick and mortar business owner, I’m painfully aware of how much it can suck when having to deal with gift cards. While they’re a great source of revenue, getting set up with them can be a nightmare and the choices for a provider are generally no better.

GiftRocket has already turned the gift card situation on its head. By allowing customers to purchase a credit for any business, it has opened up doors and revenue that has been missed for quite some time. Long story short, it works like this:

Let’s say you get a GiftRocket for $20 to Bill’s Tacos. You go to Bill’s Tacos, press the “redeem” button on your smartphone, and then you get $20. We use phone GPS to make sure you’re there. You pay like you normally would, but you’ll get money back to cover your costs.Screen shot 2011 04 01 at 12.10.20 PM 520x339 GiftRocket: A free gift card program that works anywhere

The money? It changes hands via your PayPal account. But if your bill doesn’t add up to the amount of your GiftRocket, that’s not a problem. Even if you only use $5 of the $20 gift, the entire amount is deposited to your account. Oh, and it never expires. In fact, you can even get reminders about unused GiftRockets so that there’s no longer money left on the table, so to speak. GiftRocket makes its cash by taking a $1 charge, plus 5% of the value of the gift.

GiftRocket founders Nick Baum, Jonathan Pines and Kapil Kale entered Y Combinator with a referral and an idea…and not much else. Like most great ideas, it helped them solve a problem that they were already having — the inability to cover food, drinks or the like for friends in other cities.

The newest addition to GiftRocket? A “Powered by GiftRocket” program that will help small business owners advertise their use of the service. Kale says that nearly 90% of businesses don’t have a gift card program. Since GiftRocket operates independent of the business itself, the merchant can easily increase profits without a massive shift in daily operation.

The process is supremely simple. A business heads to the GiftRocket for business page, enters their name and location and then a search is performed. The business can then generate a button to stick onto their website so that visitors are able to see the GiftRocket option and more easily purchase it. Sure as heck beats a phone call and giving out your credit card number for a gift card that can easily be lost, stolen or forgotten about.

Screen shot 2011 04 01 at 12.14.18 PM 520x312 GiftRocket: A free gift card program that works anywhere

From where I’m sitting, GiftRocket isn’t just the next generation of gift cards. Since we take our phones everywhere, and GiftRocket works on any smartphone, it’s the perfect mesh of simplicity for both the business and the buyer.