Gift Card Systems

What are gift card systems?
Gift card systems use computer-encoded cards to offer retailers an easy to use, trackable solution to increase sales and retain regular customers. They can be used to gather customer information and monitor buying habits while enhancing the shopping experience.

Gift card systems have three primary uses:

• Gifts: In lieu of paper certificates, customers can purchase value on a plastic gift card for friends and family to buy what they want when they need it.
• Loyalty programs: Retailers freely distribute these cards to customers. They allow businesses to track purchases, offer exclusive discounts, or award points towards in-house purchases similar to an airline's frequent flier program.
• Refunds: Instead of cash, retailers can give customers the value of returned items on a gift card. This keeps the funds in-house and assures that the customer will return to shop with you again.

Why use gift cards?
Many businesses employ gift card systems to replace outdated paper gift certificates that need to be processed and managed by hand. A gift card system automates everything from determining the value of the card to tracking what the customer uses it for. You simply choose the design of the card and determine if the value will be a fixed dollar amount or chosen by the customer. The recipient can use the card like cash or a credit card to buy merchandise and can even maintain a balance if they don't use the full amount.

As a marketing tool, a gift card system allows you to offer discounts and rewards to customers, creating a constant reminder to come back regularly for similar bargains. Customers get an immediate payback and thank you simply for doing everyday shopping, and can earn points towards free or discounted merchandise in the future. It can also keep tabs on what the customer buys, allowing you to offer additional savings on specific items on future visits, and helping you compile valuable purchasing data across wide customer segments.

Popular uses
Here are some examples of how different businesses use a gift card system to raise brand awareness and provide the customer with an easy way to make future purchases and accumulate loyalty points:

• Coffee houses use cards as gifts good towards future purchases
• Supermarkets offer exclusive discounts to cardholders and track what they are buying
• Retail stores allow customers to earn points that can be used towards free or discounted future purchases
• Casinos track what games customers play, how much they spend, and what they do outside the gaming area (entertainment, meals, accommodations)
• Electronic stores display cards good for fixed dollar amounts as impulse purchases at the point of sale
• Pharmacies access your account information quickly to avoid long waits

Reporting
Gift card systems detail each card's activity. They provide monthly statements with reports to track buying behavior, customer demographics, and purchasing frequency. You can then use this data to modify existing programs and create new ones.

Security
One of the benefits to a gift card system is security and fraud prevention for both you and your customer. The cards may include a PIN concealed by a scratch-off area on the back of the card. The card has no value until it's activated at the point of sale. Other cards feature database encryption and security audits to prevent theft and forgery. If a card is already activated and it is lost or stolen you have the ability to block or cancel it at a moment's notice.

Need to know checklist

• What will my gift card system be used for?
• Am I chasing competition or trying to offer a better overall shopping experience?
• Will I prefer fixed value or customer selected value gift cards?
• Do I want to enforce expiration dates on any points or dollars of a gift card?
• Do I want to design the card, or will I need the vendor to make one for me?
• Who manages my gift card system?
• What safety precautions can I take with my gift cards to protect customers against theft or loss?
• Will I require training to learn the software?

Gift card systems pricing
You can pay as little as $99 for 100 personalized cards, marketing materials, and account setup (terminal programming, account coding, Web access for program reporting, training, and help documentation.) You will also pay a monthly fee of $35 to $50 for transaction processing, reporting, and customer support.

There are more enhanced options for customized designs, additional marketing materials, and an increased supply of cards that can range from $500-$700.

Some service providers my offer options to pay per transaction or by flat monthly fee. These plans require monthly minimums (typically 1,000 cards) and can cost $40 per month or $10 plus an addition $0.10-$0.25 per transaction. These options let you choose a pricing structure that's right for the number of cards you will use and your expected transaction volumes. However they're a la carte: you must purchase everything separately.

You can purchase a non-PC device to activate the cards for around $500. Software to create your gift cards, develop the program, and manage the accounts can start at $400 and up.

Gift card systems tips

• Consider reloadable cards. You pay about $1 per card so encourage customers to reuse gift cards.
• Charitable cause. Just because you offer a points-based reward system doesn't mean they will use it. Instead of letting those points go to waste, set it up so customers can elect to donate their points to charity.
• Don't forsake your regulars. Even if you use gift cards to bring in new customers, don't overlook your loyal customers. Make sure to offer all rewards-based programs to the people that have frequented your business before you instituted a new plan.
• Set up anywhere. Gift cards aren't exclusively for checkout lines and at the POS. You can offer other retailers and independent contractors a percentage of your profits by offering your cards in their stores. This will help expand your market presence beyond your locations.