Does your business sell and accept gift cards? If not, you could be missing out on an opportunity to increase revenue, strengthen your brand, and improve customer loyalty. Gift cards are essentially a prepayment to your company, giving you the income upfront before the customer starts shopping. A gift card can be physical or digital.
A customer initiates the purchase of the gift card, either in person or online. If purchased in person, the cashier selects the gift card program from the POS system and activates the gift card with the specified amount. The customer pays and receives the gift card as well as a printed receipt with the gift card balance. The customer then gives the gift card to the recipient.
If purchased online, the customer inputs the amount or selects from a drop-down list of available amounts. The customer enters the name and email address of the recipient, writes a note to the recipient, and completes the payment. The system automatically sends the recipient an email with the note, gift card amount, a unique number or barcode for redemption, and redemption instructions.
Customers can redeem gift cards with a physical card, a printout of a digital gift card, or even a QR code on their mobile device. For the cashier, accepting payment is as easy as selecting the gift card option in the POS system interface. The cashier will then swipe the gift card if it has a magnetic stripe, scan it if it has a barcode, or enter the gift card number manually.
The merchant account payment processor will approve the purchase if there is a balance remaining on the gift card and will deduct the amount of the purchase from the balance. If the purchase costs more than the balance on the card, the POS will alert the cashier that another payment method is required to cover the overage.
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If there is a remaining balance on the gift card after the purchase, a receipt will print to show the remaining balance, and the cashier will return the gift card to the customer. If there is no balance remaining, the cashier can throw away or recycle the card.
To redeem a digital gift card online, customers select “gift card” as the payment type at checkout. Alternatively, customers who have a preexisting account can log in and add the gift card balance to the profile. Depending on how your website is set up, purchases will draw from the gift card balance until it is depleted, or the customer can choose whether to use the gift card balance at checkout.
There are many benefits to selling gift cards, such as increasing brand awareness and improving cash flow. Here are six ways gift cards can help your business:
Since gift cards are branded with your business name, logo and message, they act as an ever-present ad for your company every time recipients open their wallets. Gift cards are among the most cost-effective marketing you can implement because they offer a compelling incentive to visit your store or website. In addition, the person who bought the gift card acts as your brand ambassador. Their purchase of the card represents a positive recommendation to the recipient.
When a customer buys a gift card, you get the money immediately and do not have to wait until a holiday or the recipient’s birthday to receive that revenue. If the recipient does not use the gift card or only uses a portion of the balance, your business has a lower cost of goods overall.
According to the Consumer Pulse study by InComm, millennials buy the most gift cards, comprising 37% of gift card buyers. Gen Xers make up another 28%. Also, if your market is married women without children, you’re in luck – half of gift card buyers meet this description.
Gift card recipients may not even have heard of your business before, but receiving a gift card increases the likelihood that they will shop at your store. If you offer digital gift cards, capturing the recipient’s email gives you the ability to send them advertising and promotions.
Gift cards are great options for gifts from business owners to employees or top customers. The cards have a high perceived value but leave the specific gift choice to the recipient. According to a study by Blackhawk Network and Murphy Research, employees appreciate receiving gift cards from their employers, with 69% viewing them as a reward. [Read related article: Creative Ways to Show Employee Appreciation]
Even if what you sell cannot be easily wrapped and put under the tree, you can boost your holiday sales by offering gift cards. Gift cards are a boon for all kinds of service businesses, such as gyms, salons, car washes and restaurants. In fact, DealDrop found that gift cards rank No. 3 among the most wanted holiday gifts, with 17% of consumers saying they would like to receive one.
First, decide if you want to use physical or digital gift cards. Physical gift cards give customers something to present to the recipient and also serve as ongoing advertising for your business, but they are costlier and more difficult to implement.
Digital gift cards are growing in popularity, especially in light of the COVID-19 pandemic, and can easily be used for e-commerce businesses. These gift cards are inexpensive and easier to set up.
Whatever type of gift card you choose, you will need a POS system that supports gift card transactions. Here’s a step-by-step overview of how to set up both physical and digital gift cards.
Simply ordering a bunch of gift cards does not ensure that you will get the maximum value from your gift card program. These tips can make the difference between a halfhearted program and a spectacularly successful one:
Now that you know how a gift card program can benefit your business, here are some strategies for selling as many as possible:
Many POS systems support gift cards. Here are some of our top picks.
Lightspeed Retail POS allows you to accept gift cards, but you will need a third-party gift card vendor to create and purchase them. Although you can use any third-party vendor, the barcode on the cards must be printed using EAN-13 or UPC-A standards to be compatible with the Lightspeed POS system.
Lightspeed can accept physical and digital gift cards if you have enabled Lightspeed eCommerce. Another perk of this POS is that customers can use their gift cards both online and in-store, regardless of whether the cards are physical or digital. One downside is that there is limited customization of the email that Lightspeed sends to gift card recipients. While customers who buy a gift card online can select an image to go in the gift card email, the text of the email cannot be changed.
Square’s POS system provides everything you need to offer gift cards in-house. You can buy physical gift cards from them with your logo and choice of background template starting at 80 cents each, or you can design your own. The gift cards have a magnetic stripe and are reloadable. Square also offers digital gift cards. You can sell digital gift cards in person or online, but you can only sell digital gift cards online. Square charges 2.9% plus 30 cents for each gift card purchased online, or 2.6% plus 10 cents for each one bought in person.
Clover’s POS system also provides physical gift cards in-house, with prices starting at $1 each. They also support digital gift cards that customers can keep on their smartphones. Both physical and digital gift cards can be used in the store, but not for online purchases without a third-party integration. Clover charges a processing fee of 2.5% when the gift card is initially purchased.