The State of the Gift Card Economy

Now that the dust has settled on yet another holiday season, now is the time that we bask in our takings. Even though the holiday spending spikes that most businesses see during December have come to an end, big profits are still made thanks to the overwhelming popularity of gift cards in recent years. Gift cards are big business, which translates into big profits. Here we take a look at some of the facts behind them, as well as some of the industry secrets to maintaining solid numbers long after the holidays have come to an end.

Gift Card Economy

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  • Where is the statistics on how many businesses/politicians use gift cards to hide what is essentially cash with an expiration date?

  • hahajk

    this is why shoplifting is okay

  • Dani

    2 things they didn’t mention: A lot of gift cards expire after a certain amount of time. That’s right, you now have bought a gift card worth… NOTHING. Also there is no recourse for when the store’s computer system fails to read your card properly. Case in point: My mom got me a $100 gift card to Target. I used about $30 on one trip. On my next trip, I went to use th $70 remaining and was told that the card had never been activated — essentially that the card had been stolen. As I knew this not to be the case, I was pretty livid, but there was absolutely nothing I could do about it. Stay away from gift cards, imo. Give cash instead.

  • Seek Further

    On cards that expire, most states require that those funds be escheated and held in abeyance for the cardholder. But, how many people follow-up? Almost none. So, it’s our governments that are benefitting.

    For cards that don’t expire, those funds have to be booked as a liability against future redemption. Only after a very long time, can the retailer book unspent funds as revenue.

  • If you get a gift card spend it in the next week or you will forget about it. If you do not need it in the foreseeable future then give it to someone who would.

  • Few notes:

    You can always sell a gift card and get cash back for it from a variety of sites: plasticjungle.com, giftcardsagain.com to name a few.

    Laws have changed. In California for example, you can cash out a card that has less than $10 on it. So you don’t have to spend over the amount of the card to get your money’s worth. Get close to the limit and cash out.

    Authorization. Best thing to do is give someone the gift card receipt/authorization along with the gift card. You’re not trying to hide the dollar amount spent, afterall. So give the receipt along with the card so they have proof of activation.

  • very compelling stats… good reminder to retailers

  • Pam

    The really important thing is for the gift card giver to keep their reciept from the card purchase. There should be recourse if they have that. I tell all my customers buying gift cards where I work to keep that reciept because if the card is lost , it’s the only way to get the money back.