Kasavana, Michael L. (2007). Plastic Never Looked So Good. Hospitality Upgrade Magazine, 118-128. 10/14/2007.
http://www.hospitalityupgrade.com/_files/File_Articles/HUspr07_Kasavana_GiftCardTechnology.pdf
This article talked all about the use and technology of gift cards. The industry has increased sales in gift cards in the past couple years and is predicted that it will only continue growing. Most people claim to get at least one gift card a year. As some might say it is or can be looked to as impersonal many say they would rather receive a gift card as a gift. There are many ways the gift certificate has advanced from what it used to be. The magnetic stripe saves retailers and hospitality operations time and money. The old paper gift certificates required bookkeeping and manual authorization. Now gift cards are saved and redeemed by computers and can even be dealt with online. When a consumer receives a gift card they can check the balance online and also some stores allow you to purchase online. There are two card types, open looped and closed looped networks. The open looped are ones like MasterCard, Visa, and American Express. This means they can be used in many different locations. Closed looped are restricted to certain restaurants or stores only. Breakage is the key term used to explain the gift cards that are never redeemed. When a gift card is purchased it is not counted as revenue to the establishment but as a liability until the card is redeemed. The breakage funds are given to the gift card processor not the retailer. Next upspending is when someone buys more than the gift card amount causing them to have to pay the extra amount in cash. Technology is advancing with POS based on premise, ASP online, off premise at places like drug stores, and self service kiosk outside of restaurants or stores that can distribute cards even after the store is closed. Security to prevent gift card fraud/theft is also advancing with things like password protection and scratch off security codes on cards.
3 comments:
I think gift cards are a great up and coming trend in the hospitality industry. Although some people see these cards as an impersonal solution to gift giving, many really appreciate it. They are convenient for the seller, the buyer, and the recipient as well. The old paper gift certificates were difficult to keep track of and easy to duplicate. The new plastic cards are easy to process and keep secure. I think the best thing about these cards is that many times they introduce new people to your property. Many people are not willing to go to a nice restaurant because they don’t want to spend the money. When they receive a gift card they have a chance to try different restaurants. If they have a good experience they may be willing to go back even if it is expensive. Gift cards are almost a necessity for restaurants around the holidays. They bring in a lot of revenue and now they are easier and safer than ever to use.
Heather, I totally agree with you, I love getting gift cards; you can pick your own gift instead of getting something you don’t want but have to wear to be nice. The fact that you can personalize gift cards is a great benefit to companies. If you can put a picture or a name on a gift card, then the people buying them might not feel like they are totally not putting any thought into the gift. I didn’t know that there were two kinds of loops, opened and closed. Also I think it is interesting that gift cards are not considered revenue but a liability. I also think that it is great that security on gift cards is advancing, that will be another great reason to buy gift cards.
I also feel that gift cards are a fantastic new technological advancement. They are convenient, fast, and sometimes impersonal. I personally enjoy recieving gift cards than a gift that I really don't want or that I would have to return to the store location because of improper sizes or colors, etc. The new technology of gift cards in creating less stress of retailers and businesses in general. This time saver allows companies to spend more time on things like marketing to the right clientele to ultimately increase revenue and brand affinity. Companies like Wal-Mart and American Express are allowing the process of gift card giving to become more personal and showing the reciever they took a little more time to think about the gift. Often times a gift card allows the recipient to experience a new surrounding. Whether it is a restaurant aka customer service/food experience or a retailer aka brand experience. Gift Cards are a huge advancement in the hospitality industry and will continue to amaze me.
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