Information on Merchant Accounts,
Ecommerce and Credit Card Processing

December 28th, 2005 by Jamie Estep

Accepting Gift Cards

Filed in: Credit Card Equipment, Merchant Accounts |

Often overlooked, gift cards are one of the most effective customer retention and marketing methods available to businesses.

There are 2 types of commonly used gift cards. The first is the Visa or MasterCard branded gift cards that work just like a credit or debit card. While convenient, these gift cards don’t offer much benefit to most businesses. The second type of gift card is a proprietary self branded gift card, that is essentially an electronic gift certificate. These gift cards also work just like a standard credit or debit card, but are limited to being spent at your own company. For many businesses, these are one of the most effective customer retention and marketing mediums available.

More than just a good idea:
Gift cards offer a great benefit to retail stores and can be beneficial to some online businesses. Gift cards are one of the best customer retention methods available for any business, as customers will return to your business to make an additional purchase. Additionally, when gift cards are given as gifts you gain new customers for each new person that gets a gift card.

Statistically, about 25% of the money put toward gift cards is never spent, which is money that is kept right on a businesses bottom line.

Who should use a gift card system?
Businesses that will benefit the most from a gift card system, are retail stores that offer unique but widely desired products. Many service orientated businesses can also benefit from gift cards. Generally if your industry is something that many people need or want then gift cards may be right for you. Alternately, if you only offer high end products, custom products, or your products are only of interest to a small percentage of people, then gift cards are probably not a cost effective solution for your business.

How to get setup accepting gift cards:
Gift cards are normally setup by the same company that you process your credit cards through. A gift card program can be added to most common credit card machines or software programs. There will be an initial setup fee that covers the creation of your gift cards. This fee varies depending on the complexity of your card design and the number of cards that you need. After the setup fee is paid, you will only need to pay for more cards when you run low.

Gift cards are processed just like a credit card through your credit card machine. You can also add to the balance of a gift card if a customer wishes to recharge it.

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