The Prepaid Press - January 2009 - (Page 24)

GIFT CARDS & PROMOTIONS Dec. 2008 / Jan. 2009 - 24 PREPAID IOI by Professor Retske Gift Cards OK, let’s have a show of hands. How many of you have gotten gift cards in the past? Most of you. How many gave gift cards this year? That’s all? Well, I guess, for students, it is more blessed to receive than to give. Well, about one in two expect to receive a gift card this year, so you are a bit above the average, but that is logical since gifts for youth are a major market for gift cards. Everybody loves them! Gift givers love them because they don’t have to figure out a perfect gift. Gift recipients love them because they can pick their own present. Retailers love them because they reduce returns and often result in a bigger spend than the card. One home center has found that $100 gift cards often result in purchases of $150, or more. The recipient uses the card to get something more expensive, making up the difference themselves. Consumers, givers and recipients alike, find them to be a major convenience. That is why they bought billions of dollars of them in 2007. The gift card malls that have sprung up in nearly every drug store, supermarket, and retailer THE BAR JUST GOT RAISED around, are filled with cards from retailer-specific merchants in every conceivable category -- clothing and home goods, dining, leisure/ experience, airlines and hotels, entertainment, and even music downloads. There are two basic categories of gift cards, open loop and closed loop. Since closed loop were arguably the first to market and the bigger category in terms of sales, let’s start with those. Closed loop cards are retailer-specific, and are to be used at one retailer, or its branches. They are the successor to gift certificates that were very popular in the past, for the same reasons that closed loop gift cards are so popular today. Closed loop cards are easier to buy and use than gift certificates ever were. They usually carry the branding of the retailer that will redeem them. Restaurants, hotels, entertainment, clothing stores and other retailers all have their own closed loop gift cards. You can see racks of them at retailers. If you haven’t noticed them, you might want to clean your glasses! You can even buy “virtual” gift cards today that can be redeemed at iTunes, Amazon, NetFlix and other online retailers. They can be sent to the recipient in an email, making them ideal for last minute gifts. The attractiveness of closed loop cards is that the giver can show that they recognize a bit about the recipient. For example, if your grand- The gift card malls that have sprung up in nearly every drug store, supermarket, and retailer around, are filled with cards from retailer-specific merchants in every conceivable category… child likes to read, you can buy them a gift card for a bookseller, or you can buy a sporting goods card for a nephew that likes athletics. On the other side of the coin are open loop gift cards. These are recognizable because they usually have a logo of one of the major credit cards – Discover, MasterCard, Visa, American Express, etc. Because they have this branding, they are called “general spend cards,” and recipients can use them wherever they like. In either case, gift cards have gotten some refinements over the past few years. One very popular enhancement is the ability for the recipient to track the purchases online and watch the overall balance as they spend the card. How big are the markets for gift cards? Well, one researcher, Mercator Advisory Group, has recently estimated that closed loop cards will reach over $200 billion by 2011. The same study projects open loop cards to be over $100 in 2010. This study was adjusted in light of the current economic conditions, so it should be fairly accurate. For retailers selling gift cards, the main issue is merchandising. They are often impulse purchases, so locating them close to the cash registers has been a common strategy. Some retailers also place cards near greeting cards and holiday gifts. This is all fairly new, so it is likely that effective strategies will emerge as they mature. Well, students, I hope you had a Happy Holiday, and hope that you got all the gift cards you were hoping to get! TURNKEY ELECTRONIC POS We are excited to announce the opening of our state of the art customer support center; over 50 dedicated professionals to be your back office with an unparalleled level of service. • Customer Support • Customer Set up/Training • Proactive Customer Retention • Back Office Accounting • Product Management • Terminal Management • Electronic Airtime • Integrated Long Distance • Bill Payment • Stored Value • Cross Border • Global Roaming Recipient of "2008 TSP of the Year Award" from Boost Mobile AGENTS WANTED 212.219.2220 sales@prepaypoint.com Built EXCLUSIVELY on distributor alliances

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The Prepaid Press - January 2009 Economic Crisis Sharpens Focus on Stored Value Cards Industry Veterans Weigh In on 2009 Prepaid Opportunities Contents From the Publisher: Ready for Change? The Prepaid Press Thanks its Editorial Advisory Board Regulatory Rundown 2008 Milestones Prepaid Wireless Providers Capitalize on Economic Downturn Prepaid Telecom in Brief APCC Services Settles With Calling Card Providers Boost Mobile Offers All-in-One Prepaid Package SonarTel Prepaid Customers Can Use Accounts in More Countries BillSoft Selected by Integra Telecom Pingo Adds PC “SoftPhone” Calling kajeet, the Cell Phone Service for Kids, Wins Award Prepaid Wireless Roundup The State of Prepaid Technology: Wholesalers & White Label Services New Millennium Releases Wireless Survey Results 5 Minutes With Paul Amick, EVP & Co-Founder, PhoenixSoft Millions Could Cut Cell Phone Bills in Half New Virgin Poll Reveals Buying Habits The Legal Line BioPay Expands Offering for Underbanked IDT to Sell European Prepaid Payment Business iPayStation Launches Network for Distributor Stored Value Solutions Appoints New VP Cellular South Offers Mobile Banking for Regions Bank Javelin Research: Processor Important in Prepaid MiCash Announces New Prepaid Debit Card Monitise and eCommLink Partner Platamovil Selects PhoenixSoft’s Cirrus Softswitch Prepaid Market Forecasts to 2011 Payments & Processing in Brief Prepaid 101: Gift Cards SCA’s PrizeSuite Enables Promotions MT&L Offers Gift Card Removal and Destruction Heartland Payment Systems Acquires Chockstone Amex and Rymax Offer Gift Cards TransCard Announces Corporate Gift Card Website Gift Cards & Promotions in Brief Our Advertisers Contact Us

The Prepaid Press - January 2009

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