4 Reasons Gift Card Processing Companies Continue To Thrive
Even though the holidays have passed, your store may still be seeing the after-effects of the big holiday shopping season. Generally, the first few months of the New Year are always a time for shoppers to make lots of returns and exchanges, as well as to use the gift cards they’ve recently received to make more purchases. A perennial favorite for gifters and giftees alike, virtual money simplifies the shopping process and allows people to pick out exactly what they want.
Not only do gift cards have big perks for consumers, they also have major benefits for businesses that offer them. One of the chief advantages gift cards offer to retailers are that so many of them go unredeemed, resulting in additional profits. You might be surprised to learn that $44 billion worth of gift cards have gone unused since 2008—but it’s true!1
Below are just some of the benefits gift card processing companies coupled with an implemented POS solution offer to businesses.
Lowered price sensitivity
When customers come into your store to make a purchase, they often have a rough limit of how much they’re looking to spend for a particular item or for the overall transaction. If they have a gift card in hand, however, that mental limit goes up or disappears completely since they are no longer using their own money. In these cases, consumers are much more likely to purchase regular-priced goods and services instead of making a beeline for the clearance section. Shoppers armed with gift cards are also very likely to make a total purchase that exceeds the amount on their gift card.2 In this way, consumers will purchase higher priced goods when they have a gift card—leading to big profits for merchants.
Improved brand awareness
All companies that are looking to grow their business and increase sales must consider how to educate more and more consumers about their products and services. Gift cards are a great way to accomplish just this. For example, a recipient sends the gift giver a “wish list” containing virtual money from a store the giver has never heard of before and, thus, the giver becomes aware of the brand and also spends money at that location. On the flipside, a gift giver could give the recipient a gift card from a favorite clothing store or restaurant, thus introducing the recipient to a new merchant. The more your gift cards are bought and gifted, the more brand awareness you will build among your target market.
Easy-to-use mobile options
Plastic gift cards have been around for years now, and nearly all consumers understand how they work—swipe just like a credit card and redeem for the purchase. Today, consumers are becoming increasingly comfortable with mobile payments and retailers are introducing mobile gift cards. With tools like Apple's Passbook, consumers can store gift cards on their smartphone and then quickly access them while in store or while shopping on your eCommerce website. In this way, they won’t have to bother with digging out their wallet to find the plastic gift card.
Mobile gift cards enables shoppers to use their gift cards more easily and quickly, since all of the associated data is stored right in their smartphone. No more worry of forgetting gift cards at home on the kitchen table. As a result, retailers can recognize the revenue gained from cards faster and may even see customers spend more than their allotted amounts. What’s more, virtual money is a great way for companies to attract new customers. Because the redemption codes are usually emailed when uploaded onto mobile devices, you’ll instantly obtain the recipient's contact information so you can add them to your customer database for future promotions or shopping incentives.3
Gift card processing offers companies many advantages, including boosting brand awareness, attracting a new audience of customers and driving sales. But, to reap all of these benefits, you must first have the technology and software in place to make the rewards of gift cards possible. By implementing a gift card program and selecting the perfect POS system for accepting mobile payments, your business will receive the gifts of gift and stored value cards throughout the year.