Gift cards continue to be both lauded and chastised for existing. What’s all the furor about, anyway?
The Kansas City Star, is reporting that the modern-day gift card, in its current form, is celebrating its 20th anniversary after being created by the folks at Blockbuster Video. Back in 1994, Blockbuster was issuing paper certificates to be used for gifts, but Blockbuster found out that the certificates were easy to forge, costing the company millions.
Blockbuster then invented the plastic gift card, which allowed the customer a more secure way to give friends and family members a better way to rent videos. It also created new problems. Lack of information about the cards themselves, such as any expiration dates, penalties, fees, among other things, were left unspecified. Still, losing the paper certificates was an important step in gift card evolution.
Neimann-Marcus, Mobil, and other corporations began issuing these “closed-loop” gift cards, meaning the card had to be used at the store that issued the card (“opened-loop” cards are issued by banks or credit card companies). Unfortunately, they didn’t start out as popular, with less than 10 percent of all gift cards being redeemed. Though businesses get the money for gift cards, they don’t want the cards to sit unused in drawers or wallets.
Two main reasons why companies want you to use the cards as soon as possible is that people who use their gift cards tend to spend up to 20 percent more than the worth of the gift card, plus the cards themselves are like having mini-bulletin boards reminding customers, like cheap advertising. The biggest reason is now, states are starting to follow Missouri’s lead and are seizing unused gift card funds and posting the name of the purchaser of the gift card and amount remaining on the card. Any unclaimed funds can revert back to the state for its use. So, stores would rather you spend the money in their stores or online.
The Amarillo Globe News is reporting new changes will allow customers more leeway when using gift cards. United Supermarkets and Wal-Mart stores are letting customers trade value from other companies’ gift cards to use in the respective stores. Customers will not get full face value for their gift cards, but can get, in some cases, up to 95 percent of the gift card’s value.
There is now a new, improved method in the gift card industry: the e-gift card. The customer can go online and buy a gift card, but is instead sent a code to be used in-store or online for purchases. There is no physical plastic card.
Gift cards will continue to evolve, especially since it’s a $32 billion industry. However, with $1 billion being unused, corporations will try new ways to utilize gift cards for customers.
[Image courtesy of Greenliving.lovetoknow.com]