Sunday, October 14, 2007

Plastic Never Looked So Good

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.

I enjoy receiving gift cards for presents, especially from that aunt that gives you red leopard print pleather pants for Christmas and oversized wool sweaters from 1980. The ability to pick the gift you want is more than accommodating to this day and age. However, I do feel as though gift cards do seem impersonal for the most part, because it is easy for someone to just run into a store and go right to the check out line and pay for a gift card, boom shopping is done! They are convenient and that is the point. Some gift cards do however offer a customization feature that allows you to add the name of the recipient like on American Express gift/debit cards and Wal-Mart with the ability to upload a picture to the card to make it more personalized. Where I work they just updated to the plastic electronic gift cards and they have a completely separate system that we use to activate and redeem the gift cards but I guess the advancement will come little by little. The security features will also continue to advance, especially since they have already started. Places like drug stores where you can purchase gift cards to all kinds of places and they can only be activated when scanned at the register. From paper to plastic, technology always amazes me, what will they think of next?!

3 comments:

Jill Jacobs said...

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.

Sharon Moser said...

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.

Liz Dolan said...

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.