Merchant Benefits from a Stored Value Card Program

Improved Cash Flow
This one is simple. Collect money today for products and services to be provided in the future. You have money in hand upfront and not one piece of merchandise has left the store nor one minute of service been expended. Since the average gift card purchase is $200, a lot of cash can be generated in a short period of time. For example, sell 50 gift cards during your first month, and you've generated $10,000 in cash for unused cash. For an example of the benefits of improved cash flow, see Club Cacciatore and Jeff's Car Wash above. Other examples: Lowes sold 580,000 gift cards in 9 hours on Christmas Eve. Starbucks sold 2.3 million gift cards in their first month of selling gift cards.

Enhanced Profitability
Twelve percent (12 %) of total gift card sales is never redeemed. That money goes to the bottom line as pure profit. Using the example above where first month sales generate $10,000 in cash, you have an opportunity to put $1,200 directly to your bottom line profit. While some states carefully regulate the unused balance stored on gift cards, in most cases such balances present enhanced profitability for merchants.

Brand Recognition
Most people carry gift cards in their wallets. Each time the wallet is opened, your business name and logo are seen. Gift cards have been described as "portable billboards in the wallet". Best Buy sells hundreds of thousands of gift cards every year. That's hundreds of thousands of impressions of the Best Buy logo every time a wallet is opened. By the year 2006, the gift card industry predicts that 750 million gift/stored value cards will be issued to consumers.

Generate Customer Loyalty
Achieving customer loyalty means you have turned a first time customer in a repeat customer and kept them from visiting your competition (See the Lucky 7 Plan promotion above). Recent statistics reveal that 55% of gift card holders make more than one trip to your store, primarily because the full amount is typically not spent during the first visit. But on the second visit 61% of those customers spend more than the remaining value of the card. The best interpretation of these statistics is that for every $100 gift card sold, the merchant can expect an additional $50 of business sales.

Eliminate Cash Refunds
Cash refunds become a dinosaur of the past when you can issue a store credit on a gift card. Not only will 61% spend more at your store than the credit value on the card (see customer loyalty) but merchandise returns that result in the issuance of a loyalty/gift card virtually guarantees the retailer that the customer will revisit their store. Also, credit stored on a stored value card has far more credibility in the consumers' eyes than credit issued on paper.

Considerable Marketing Impact
Forty-five percent (45%) of adult customers used an electronic gift card last year. That's a gift card, not a credit card. If nearly half of all consumers have made use of a gift/loyalty card in the last 12 months and you do not have a gift card program in your store, you could potentially double your business just by adding gift cards at the point of sale.

It's been proven that merchants who implement gift card programs in their place of business actually take away customers from their competition who doesn't. Also, market share is actually increased when current customers give a gift card to non customers.

Plastic cards are more prestigious than paper. The image that plastic presents is futuristic, whereas paper is old fashioned. Give a person a $50 paper certificate and another person a $50 plastic gift card and the person with the paper certificate will not feel that they received as good a gift

Enhanced Security
While paper gift certificates can be copied or altered, plastic cards cannot. (See the first example of Sally's antique store above) Because paper gift certificates are like cash, they must be stored like cash in the register. Stored value cards do not require a pre-programmed value prior to purchase, which dramatically reduces theft and employee malfeasance. Additionally, point-of-sale activation provides easier accountability (see below).

Easy Reporting & Accounting - Complete online realtime reporting eliminates problem areas for accounting and taxing authorities. And the time it takes to purchase, activate or make a payment with a plastic electronic card is just seconds. Gift cards generally have a number printed on them and the number is encoded in the magnetic stripe on the back of the card. In the rare case were a number is not readable or the magnetic stripe doesn't work the consumer can be assured they will still be able to utilize the card without embarrassment. Gift/stored value cards can easily be reloaded with additional value over the phone, in person or even over the Internet. Most merchants provide the consumer with the ability to register their cards so that if lost or stolen, the card can be immediately deactivated and another can be reissued with the exact amount remaining on the lost or stolen card