This article content is provided with our sponsor, Bank of America Merchant Services.
Convenient, flexible and more personal than cash, gift cards have topped “America’s Most Requested Gift Items” list for nearly a decade, according to the National Retail Federation1. In a 2015 pre-holiday survey2, consumers reported they planned to spend in excess of $25 billion on gift cards over the holiday season. Racks of gift cards are available in grocery and drug stores across the country, with national retailers and restaurant chains taking prominent spots in the displays. However, small to mid-sized merchants can also cash in on the duel trends of buying local and buying gift cards.
More than just a convenience for customers, gift card programs offer benefits to the businesses that offer them. According to Bank of America Merchant Services3 Vice President and Product Manager Bane Rowe, prepaid cards help increase marketing and online sales capabilities and improve brand exposure. Promotional card giveaways, says Rowe, may help attract new customers and build on the loyalty of current customers.
Businesses may expect a boost in revenues directly related to gift cards. A 2015 First Data consumer insights study4 found that 72 percent of consumers spent beyond the value of their gift cards, and one-third redeemed their cards for something they otherwise would not have purchased. The First Data study also reports that compared to 2014, respondents said they spent an average of $58.95 on plastic cards, which is up from $57.64. The average spent on virtual cards was $56.98, up from $54.90.
Gift cards may increase foot traffic and overall spending. Of respondents to the First Data survey, 52 percent said that receiving a gift card led them to visit a location more frequently, and 40 percent said they would not have visited if they had not received a gift card. When it comes to returns, issuing gift cards for returned merchandise will keep revenue in-house. Another benefit worth noting: outstanding balances can earn interest.
The costs of starting and maintaining a gift card program are minimal and include the initial location set up, card production and transaction fees. You also may not have to make any changes to your point-of-sale system. According to Rowe, “Bank of America Merchant Services has a long list of certified POS vendors, so integration is not costly or difficult. In addition, we have stand alone terminals which can be configured for gift cards.”
Bank of America Merchant Services offers a variety of card types and card features. The Gift Cards To Go® program is described by Rowe as their starter program. The low-cost option includes 100 cards and carriers, available in six different designs. The Standard Cards program offers approximately 60 gift card template options with a minimum order of 250 cards. Bank of America Merchant Services gift card programs include consultation, training and marketing support. A unique card numbering scheme and PINs help reduce the risk of fraud. Another useful feature of the Bank of America Merchant Services gift card programs is the reporting function. Through the ClientLine® online reporting tool, Bank of America Merchant Services customers have online access to detailed transaction reports, including gift card activity.
“The marketplace demands more ways to pay for goods and services while also demanding more security and stability,” says Rowe. “As a proactive and forward thinking provider, we will help you keep up with these demands by providing innovative products and services that enhance your revenue while minimizing your risk. We look forward to helping our clients maximize the value and minimize the cost of your program.”
1 “Retailers In For A Very Digital Holiday Season, According To NRF Survey,” National Retail Foundation. [https://nrf.com/media/press-releases/retailers-very-digital-holiday-season-according-nrf-survey]
2 “Gift Cards Data 2015,” National Retail Foundation. [https://nrf.com/sites/default/files/Gift%20Cards%20Data%202015.pdf]
3 Bank of America Merchant Services. [http://merch.bankofamerica.com/Home]
4 “2015 Prepaid Consumer Insights Study,” First Data. [https://www.firstdata.com/en_us/all-features/prepaid-infographic.html]
This article was written by Gillian Burdett for Small Business Pulse