Gift Card 101
3 Reasons You Need a Gift Card Program. Now.
If you’re reading this guide, you must be curious about starting a gift card program for your business. That’s fantastic, because gift cards have become a must-have for B2C companies.
But don’t just take our word for it—check out these stats:
Closed Loop VS Open Loop
The minute you start looking for gift card companies that can help you get started, you hit industry jargon. Let’s start by clarifying what we mean by closed loop vs open loop cards.
Top 8 Gift Card Program Benefits
You’ve heard about the benefits of having a gift card program, right? Increased sales, more repeat customers, overspend on gift card value—the list is pretty long. Let’s take a look at the top eight reasons you’ll love gift cards as much as your customers do.
“I Want Gift Cards For My Business!” You Say?
Great! Here’s where you have a really big decision to make: will you run your gift card program in-house, using an issuer and a processor? Or will you outsource your end-to-end gift card program management? Before you decide, here are some questions to ask yourself and your team.
Who will be the legal issuer of our gift cards?
You have options: your company can be the legal issuer, or you can assign a third-party company, such as your gift card program manager. If you choose to do it yourself, make sure you have an experienced lawyer on hand. We suggest you outsource this responsibility so you don’t have to manage escheatment laws and liabilities.
Who will make sure our gift card program is compliant?
There are some very important Financial Crimes Enforcement Network (FinCEN) requirements when you’re setting up a gift card program. They’re focused on fraud, money laundering and other misconduct associated with financial transactions. It’s mandatory that your program stays compliant, even when the rules change.
Who will keep up with gift card laws?
There are a lot of rules and regulations surrounding gift cards, and they vary by region. For example, should you charge tax on gift card sales? What about expiration dates—when do gift cards expire? These questions are just a start, and all need up-to-date answers, all the time.
Who will be our gift card processor?
You need a reliable gift card processor, too, such as Stored Value Solutions (SVS). This is one part of your program that you will definitely outsource. And if you choose to outsource to a gift card program management company, they’ll coordinate with your processor to keep everything running smoothly.
Where will we sell our gift cards?
In your brick-and-mortars, of course, and through your ecommerce site. It’s easy enough to keep your in-store displays stocked. But your online fulfillment must be automated—after all, digital gift card buyers expect instant delivery. Even online orders for plastic cards can’t be handled by someone in the back office—this fulfillment, too, must be automated.
Can our finance team take on gift cards?
The back-office bookkeeping work associated with managing your gift card program has its own nuances, involving two-phase entries for sales and redemptions. More complex financial issues—such as sales taxes and escheatment—must also be actively tracked.
How can we sell your gift cards to other businesses?
Bulk B2B gift card sales are a great way to get your brand—attached to dollars to spend—in lots of people’s hands. Make sure you’re connected to a B2B gift card sales network so other companies have access to your cards for their employee rewards, sales promotions, wellness incentives, market research rewards, fundraising drives and more.
How will we market our gift cards?
Gift card promotions can drive foot or site traffic, attract new customers, grow basket sizes, increase online conversions and build loyalty—think “buy $50+ between 8 and 10 a.m., get a $15 gift card.” Gift cards can help optimize your sales, so be sure your promotional calendar is full.
How will we protect our gift card program from fraud?
These days, a robust, ever-evolving security solution is a must-have. It’s especially true for gift card programs, which are frequent targets of new attacks. Your best option is to choose one of the gift card companies that offer a full array of future-proof fraud solutions as part of their comprehensive services.
Who’s going to answer cardholders’ questions?
It’s inevitable: no matter how many instructions you include, some cardholders will have questions that can only be handled by a real person. If your staff can’t resolve the calls quickly, this is another area you should definitely outsource to a gift card program management company.