Gift Card Programs

A gift card is either a card from a credit/debit card company or from a particular merchant. It can be used in place of cash, checks, or credit cards to make purchases from—in the first case—any store that accepts that particular credit card and—in the second case—the issuing merchant. A gift card may have a use by date and may have restrictions on cash back and the minimum purchase required to use it. Gift cards can be customized to a merchant’s store or brand, employing an image and logo that customers connect with the merchant. Customers who know general information about a gift recipient’s interests, but not enough to choose a particular gift, can feel that they are doing something more targeted than just giving money, which some people don’t like to do.

The Values of Gift Card Programs

Gift cards can be one among many reasons for customer loyalty, along with quality products and other price breaks. It can allow loyal customers to introduce new customers, as well. Redeeming the gift card brings customers to review your merchandise in a way they might not have done when they came in intending to make a purchase. Newer gift cards employ security features that help reduce fraud and theft.

Although gift card inactivity fees are thing of the past, given the new credit card regulations that came into effect in 2010, the fact remains that a good percentage of gift cards go unused (6–15%) and a high percentage of shoppers who use a gift card spend more than the value of the gift card. In addition, it is reported that about 65% of Americans have either bought or been given a gift card in the past year. These three facts make gifts cards potentially a great return-on-investment for a merchant. Instead of offering a sale that amounts to an immediate $10 off, giving a gift card worth $10 will give customers the sense of getting a bargain, but in all likelihood, the merchant will end with giving up less revenue.

A gift card program associated with your merchant account can provide gift cards that are swipable on your POS (Point Of Sale) terminals, making redemption easy. They can be single-loading cards or refillable, in which case it can be used similarly to a debit card.

A new approach to gift card programs is merchants selling gift cards to other merchants’ stores. For example, there are now a number of stores where one can purchase iTunes gift cards. By carrying gift cards for other stores, you can associate yourself with merchants you admire, make things easier for your customers, and profit from another merchants’ excellent business.

Sources

creditcardchaser.com

merchantwarehouse.com