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Gift Cards and What They Mean For Your Business

Who uses gift cards?
Everyone! One of their advantages is that they are not exclusive to an age bracket; everyone from babies to grandparents (and practically anyone in-between) can use them. Because of the benefits and convenience they offer, gift cards have become the second most popular gift to give in the USA. Many merchants refer to a gift card as “the next big thing”, and with good reason. It promises guilt-free spending to consumers, and gives business owners a chance to give their sales a boost. What’s not to like about gift cards?

What is A Gift Card and What Does It Mean for My Small Business?
A gift card is a non-monetary gift issued by retailers. It has a restricted set value, and can be used at the recipient’s discretion in accordance with the issuing agency’s restrictions. The first gift card ever issued was in 1994 by Blockbuster Entertainment in Florida. It took the place of the original prize the company was giving away, a gift certificate that proved to be easy to reproduce using photocopier machines and color printers. Unlike gift certificates, gift cards require electronic authorization and contain encrypted data to prevent counterfeiting, making them secure to use. Fast-forward to 2007: According to reliable industry sources, around $60 billion worth of gift cards were purchased, with 12% of that amount bought during the holiday season alone! In early 2010, new provisions on laws surrounding gift cards were passed. Customers no longer need to rush to use their gift cards, since the law states that they remain valid for at least five years after the card is purchased. Also, merchants who issue gift cards are no longer allowed to charge recipients an inactivity fee during the first year. Since their inception, gift cards have done wonders for small businesses and their clients all over the world. With new laws and regulations benefiting both customers and business owners, it is safe to say that gift cards are here to stay.

How It Works
Gift cards can be bought in brick-and-mortar establishments or online. Most gift cards are for single use only, but some can be reloaded and re-used multiple times. They typically feature a barcode or a magnetic strip so that they can be read by an electronic machine. They require activation, usually by a phone call or online registration. The important question is, how will it work to your business’s advantage? First, let’s take a look at the advantages of gift cards to your customers.

Its Advantages
While gift cards present specific cons such as expiration dates and concerns about them being “impersonal”, their pros outweigh the disadvantages. Knowing what these advantages are and presenting them to customers the right way can already give your small business a huge boost. You will learn about the best way to market these advantages a little later on in this eBook.

Convenient and easy to purchase
Cashless shopping is what gift cards offer. They can be purchased at many banks, retailers, by phone, or online (depending on the card issuer). With a gift card, there is no need to line up at an ATM to withdraw cash if you want to buy something you want or need.

Practical and uncomplicated
Gift cards enhance the shopping experience because they are portable and do not take up too much space in a wallet. Checking the remaining balance on a gift card simply requires a phone call or a quick check online.

Suitable for all ages and occupations
More and more retailers are recognizing the marketing value of gift cards, from baby gear shops to athletic wear stores to restaurants, and just about everything in-between. This makes it the perfect gift for practically anyone in your life! They are also ideal giveaways for people in your life that are not as close to you as, say, your family and friends. Teachers, bank personnel, and other service people you regularly interact with will surely appreciate a gift card instead of another generic gift bought for the sake of giving.

Widely accepted
Millions of retailers worldwide accept gift cards, and in fact, encourage customers to use them (as a business owner, you will be glad to know why this is so later on in the eBook). Also, they are a better alternative for people who are wary of giving cash gifts because it seems like a cold gesture. With a gift card, people have the option to get them personalized while providing the recipient the freedom to pick out the items or service they like from your store (this is the best solution for that hard-to-shop-for person in your life!).

Safe to use
Giving someone a gift card presents more safety benefits than giving cash. If misplaced or stolen, a gift card can be replaced much faster. Registering a gift card adds an extra layer of protection from theft. Plus, there is no fear of overdraft fees, since it uses only the remaining funds on the card. As for electronic theft, don’t fret. There are ways and means to add a layer of protection for your gift cards (and other electronic cards for that matter). More on this a little later on in the eBook.

References:
6 reasons your small business should sell gift certificates
Wiki/Gift card
Marketing gift certificates key benefits & strategies for a small business

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