GIFT CARDS

Gift cards are an attractive and cost efficient means for merchants to replace an existing paper-based gift certificate program. More than $100 billion is spent annually on gift certificates in the US.

Program Description:
A stored value gift cards is a prepaid card with a merchant name or logo. The card can be issued in bulk to the merchant with predefined or unique value. The card can be used for payment of goods or services with the merchant(s) participating in the card program. The cards are activated and loaded by the merchant at the time of purchase and can be used until the card expires or the funds are fully depleted. Cards can also offer unique multimedia advertising when offered on CD-based multimedia stored value cards.

By 2006, the US stored-value (prepaid) card market will be worth USD 290 billion, according to Financial Insights, and will realize over USD 4 billion in revenues to service providers. While loyalty cards will also comprise 16 percent of stored-value card revenues by 2006, according to Financial Insights, single-merchant gift cards will garner the lion’s share of the market. Over half (58 percent) of top retailers already offer gift cards, according to industry estimates, but growth in this end of the merchant market may be restricted by existing processing. Plenty of opportunities exist in the “mom-and-pop” merchant market, however, where gift cards fit right in with the ISO’s retail merchant strategy and are not a business to be ignored.