Benefit of Gift Card over Paper Gift Certificates

Just like paper gift certificates gift card will have a dollar value attached to them based on the number that you sell.

Based on an average gift certificate ticket size of $50 and 200 gift certificates sold you would have a revenue of $10,000.00. While this is the limit of what can be done with paper gift certificates, Gift Card has additional bottom line features that can add significant dollar return to your business.

As Merchandize:
Display it more prominently and sell it like a product. Because of security concerns you cannot do the same with paper gift certificates.

If you increase sales of Gift Certificates by 5% then you will gain the following advantage:

200 Gift Card over 3 years x 5% = 10 additional gift cards

Using an average gift card value of $50.

10 Gift Cards x $50.00 = $500.00 in additional sales.

Fraud Prevention:
Fraud that can stem from paper gift certificates which are difficult to track and can easily be duplicated. Gift certificate fraud may be as high as 3%. For the purposes of this example, we will use a level of fraud of 1%.

Gift certificate fraud may be as high as 3%. We will use 1%.

200 x 1% = 2 gift certificates over 3 years

2 x $50 = $100.00 fraud savings.

Uplift In Spend
Gain the benefit of increased spend. Studies show typical Gift Card spend can increase by 17.5%.*

Total sales of Gift Card: $10,000 (see above)

$10000 x (100% - 8% see below) x 17.5% = $1610

  

No Cash Back
With paper gift certificates you may need to return change to the merchant. With electronic gift certificates the customer keeps the card and if they wish to purchase more they can; otherwise it becomes unused value.

Typically 8% of cards have unused value.

$10000 x (100% -17.5%) x 8% = $668

Total Potential Economic Benefit

Benefit

Dollar Value

As merchandise

$500.00

Fraud removal

$100.00

Uplift Spend

$1,610.00

Cash Back (Float Benefit)

$668.00

Total Benefit

$2,878.00

Return on Investment

170%

As you buy more cards the return actually increases as the fixed costs of start up are increased over time. For example when you reach 1200 cards you can gain the following return:

Benefit

Dollar Value

As merchandise

$3,000.00

Fraud removal

$600.00

Uplift Spend

$9,660.00

Cash Back (Float Benefit)

$4,008.00

Total Benefit

$17,268.00

Return on Investment

352%

Added Benefits:
In addition, you may gain the following benefits:

Capability to view not only Gift Card items online but also the capability to view VISA statements on line.

Paper VS Gift Card Graph