Are gift cards still a good product?

Q: I sell gift certificates at my store and was considering switching to gift cards. But with the new laws regulating gift cards, should I just stick with gift certificates?

A: Although the recently passed legislation is often called the “gift card” law, it applies equally to gift certificates, so you must comply with the new law even with your old paper certificates. (See page 6 for more details on the law).
You aren’t avoiding the new law by selling gift certificates instead of cards, but you are missing out on the many benefits of offering cards instead of certificates.

Gift cards sell much more easily than certificates because they can be merchandised better. For example, they can be placed on a counter as a possible impulse buy, while gift certificates are typically just mentioned on a sign. Studies have shown that there is a three-to-one conversion rate when switching to gift cards.

That means if you sell $1,000 a year in gift certificates, you are likely to sell about $3,000 in gift cards a year just by switching the format and putting them out on the counter. Many cards are now activated at the register, so theft of the countertop gift cards is not a problem.

In addition, the regular reports you will receive will simplify your bookkeeping and give you a clearer picture of how the product is selling.

The new laws are not as complex as they might sound. They simply require that the card is valid for at least five years and that you disclose any terms and conditions.

If a person misplaces a card for years, then finds it and comes to a store to use it, most retailers are pleased to have that business.

Finally, if a card goes unused for five years or more, the retailers may now claim the unused balance if they wish. In the past, retailers were required to give that unclaimed balance to the state as “unclaimed property”—an impractical and sometimes costly task.

MRA’s gift card program works well for many retailers, and our staff understands the regulations so you won’t have to worry about compliance. For more information about MRA’s gift card program, call 800.366.3699.