Gifts play an important role in creating and nurturing relationships. Right from the historic age, gifts in the form of commodities, gold, silver, and cash were welcomed with great gusto.
Are gift cards better than cash?
Choosing the right gift is always a challenge, even for the most seasoned gifters. That’s why cash evolved as a versatile gifting option. Cash was among the most useful gifts that enabled the receivers to buy anything of their choice. However physical cash gifts were considered impersonal and indifferent, not allowing the receiver to treat the gift as a memorable souvenir.
As societies progressed towards a cashless world, currencies began losing their fancy. Gift cards emerged as a better alternative to cash. It provided a perfect way to gift someone the flexibility and freedom to buy what they want. Today, it’s not just individuals who send gift cards to their loved ones.
New-age companies & growing organizations consider gift cards the best way to reward their customers and incentivize their employees. The global gift card market was valued at $619.25 billion in 2019. Experts estimate the market to grow at 16% CAGR and cross over $2,076 billion by 2027.
What is a gift card?
Gift card is a prepaid card that is loaded with a specific amount of money by the issuer. Anyone can issue gift cards by partnering.
A gift card works like a debit card. The issuer preloads the card with cash, in accordance with the value of the card. The purchaser can use gift cards to make both online and offline purchases. Each gift card has a unique number, a barcode, magnetic stripe, and an encoded chip. That number is “loaded” or activated with the appropriate amount of cash. This is done using the database of the gift card transaction system.
Types of gift cards
There are two types of gift cards.
Open-loop – An open-loop gift card can be used at any merchant location that accepts the issuer brand of card. For example, a gift card with the Visa logo can be used for purchases at any store that accepts Visa cards.
Closed-loop – Marketed by retail or ecommerce stores, closed-loop gift cards allow the cardholder to purchase anything from the specified seller. For instance, if you buy a gift card from Starbucks or Amazon, you or the receiver would only be able to spend it at that particular store.
Why are gift cards important for businesses?
Gift cards can be purchased instantly and they directly land in the recipient’s inbox within seconds. They are memorable, convenient, and give total freedom to buy whatever the recipient wants. They can be designed with personalizations to include the person’s name, business logo, and even a brief note.
All these help boost user experience, brand recall, and loyalty. Something cash gifts can definitely not do.
Businesses can leverage gift cards to improve cross-selling opportunities, enhance employee relations and customer relationships, and boost brand equity. Gift cards today transcend marketing. They enable businesses to test products and gain more understanding of the market, and in fact, even serve as an additional revenue grosser (card sales & upselling opportunity).
How to accelerate your gift card program?
To create and run a successful gift card program, you’ll need a well-thought-out concept and cloud-first technology expertise. Businesses need a powerful API platform to issue scalable gift cards across brands, markets, and currencies. The API platform should allow for quick deployments without contracts, with reasonable pricing, and commission rates. The ability to constantly add new retailers and leverage cutting-edge implementation technology is critical to improving the end-user experience and ensuring a return on investment (ROI) on product development.
Partnering with an efficient API-led card issuer and program manager is a great way to kickstart your gift card journey. Check if your card issuance and program management partner can deliver on the game-changing pointers below.
- Customized, form-factor agnostic gift cards issuance
- Cloud-ready services at incredible GTM speed
- End-to-end card processing via own card network interfaces
- Security features embedded with 3D secure technology
- Ability to predefine limits and rewards flexibility
- Offline and online accessibility
Looking to issue gift cards?
Write to us at business@m2pfintech.com to get started!
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