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The Gift Card Advantage

At home or on vacation, gift cards offer consumers a convenient solution to seasonal spending needs. For merchants, they can:

•	Attract and retain new customers

•	Establish a business as a destination

•	Track participation in incentive and rewards programs

•	Serve as a means for in-store credits and refunds

•	Build awareness and brand identity

•	Prevent loss and fraud

Gift Cards Take the Lead

Gift cards have left traditional paper gift certificates in the dust, according to a recent study by Memphis, Tenn. - based Fiala Inc. The survey found that 57 percent of Americans prefer plastic gift cards while only 4 percent choose paper, with nearly 40 percent having no preference.

Also of note, 39 percent of all Americans over the age of 19 have used a gift card. Shoppers typically spend $24 more than the card amount, and 15 percent wait three months or more to use the card. Gift card givers spend an average of $125 annually on gift cards.

Summer Spending Heats Up with Gift Cards

After a mild winter and partly sunny spring, some experts are predicting a sizzling summer for retail. With summer weddings and summer vacations all coming up, merchants have discovered the $15 billion gift card market as one of the best ways to get the most out of summer spending.

Gift Cards Boost Retail Traffic and Builds Loyalty

According to economist Richard Berner, quoted in The New York Times, economic growth will surge to a 4.5 percent annual rate during the second half of 2002.

With recession now believed to be in the rear-view mirror, retailers could be in for a summer spending boost. Gift cards represent an increasingly popular way to maximize revenue—and offer consumers a convenient solution to gift-giving needs.

More Popular Every Year

Introduced fewer than 10 years ago and previously available only to large retailers, gift cards have quickly become a popular trend with consumers.

"As a Product Manager for Small Business, developing a gift card has been a priority for Chase Merchant Services," said Lisa Lubrano, Chase Merchant Services, LLC, Product Manager.

Similar to a debit card or smart card, gift cards are customized with a merchant's name and logo and contain a magnetic strip that stores a specific dollar value to be redeemed with the designated merchant. Retailers collect payment before the actual product or service sale, thus enhancing cash flow.

More durable, secure and convenient than paper gift certificates, gift cards can drive sales higher by generating increased traffic. A recent survey conducted by TNS Inter-search revealed that 64 percent of gift card recipients used the full value of the card in a single shopping trip, but 28 percent took two, three or more visits to use or exceed the card's full value. And, with gift cards like those offered through the Gift Card program from Chase Merchant Services, once the card's value is exhausted, it's easy and cost-effective to reload the card with a specified value that will keep customers coming back.

Never Cash Back

"Studies show that 58 percent of gift card recipients spend more than the original value of the card," Lubrano said, adding that when the customer spends less than the value of the card, the gift card itself stores any unredeemed value. That way, the merchant never has to give the customer cash back.

"In most cases, when there's minimal value left, the customer will supplement with another form of payment for the final purchase," Lubrano said.

A Mini-Billboard

For any merchant operating a retail outlet, gift cards are proving to be powerful marketing tools.

"A gift card is like a miniature billboard in your customer's wallet or purse," continued Lubrano. "Every time they see it, they're reminded of your business and the fact that they have value left on the card. It's cost-effective advertising and branding."

With gift cards, an individual business becomes a destination instead of an impulse visit. The popular gift cards are also an excellent means to build loyalty and track participation in rewards and incentive programs.

"Loyalty programs can be set up and managed to track things like the number of visits, amount spent per visit and so forth," said Lubrano. "Our gift cards can track up to six different levels of rewards and will automatically adjust when the reward is redeemed."

For more information, please contact Custom Credit Card Processing at 703-739-2224 or at info@customcreditcardprocessing.com.

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