Gift and Reward Cards – Seven Common Misconceptions
Working with small businesses on a daily basis I often hear several misconceptions regarding stored value (gift and reward) cards. This article will address the seven most common such misconceptions.
1. A gift card is no different than a paper gift certificate – Unlike paper certificates which have no accounting system unless you establish you own manual system, a gift card program actually increases store traffic and induces new business often as much or more than 20%, but a gift card program like the one we offer here at Total Merchant Services also provides the merchant with real time online data about each customer, that covers redemptions and other transactions.
2. I don’t understand why you say a gift card is “advertising” – A gift card is a unique marketing device that has your store name, phone number and graphic that travels with the consumer in their wallet. This creates brand awareness and drives new customers much more effectively than coupons or paper ads.
3. Gift card sales will be no greater than gift certificate sales – not true. Gift cards can be displayed on your check out counter making them easy and accessible. Purchasing a gift card takes maybe 30 seconds while a gift certificate may take 5-10 minutes or more. Many merchants see gift card sales surge to many times certificate sales.
4. Gift cards create security issues and invite thief – A gift card has no value until you, the merchant add the value on the card with your credit card machine. If the card is misplaced or stolen your only loss is the cost of the card. If the card is lost, the merchant has no responsibility to replace it however you may deactivate the card if you choose.
5. A gift card requires a separate swiping device – In most cases your present credit card machine or one provided by your gift card/credit card processor will do the job. A simple reprogramming step that takes no more than 20-30 minutes is all that is required.
6. A gift card program is too expensive for my business – Shop around but many gift card programs have low or no enrollment fees and your initial cost is usually just for the cards plus any customization you may want done. Expect to pay reasonable monthly fees and/or transactions fees, however the value added benefit of a gift card program will pay for itself many times over.
7. The holiday season is the only time I might need this – Actually the number one usage of gift cards is birthdays. Also weddings and graduations are other high usage occasions.
Gift and reward cards are a great way to expand your business and grow new customers. Don’t get side tracked with misconceptions, keep your business ahead of the competition!
Eric Anderson
Regional Sales Manager
Total Merchant Services
info@accept-credit-cards.com