How do gift card companies make money ?

HomeGood to knowHow do gift card companies make money ?

Gift cards are offered during promotional operations, or they are sold by businesses. There must necessarily be an explanation for this surge of generosity or their production supported by a marketing strategy, but which one? While customers have every interest in obtaining them, the salespeople who issue them are the only ones to have the arguments for this approach to the market. This article pierces the secret of the sale of said cards.

Low-cost distribution

Chip or magnetic card distribution companies offering purchase value are not looking to win big right away. They play on the differential price of production and distribution so that they allow themselves a smaller gain on the card. These exist in two offers: usable everywhere such as Visa cards and those restricted to areas or stores.

The objective of this marketing policy is to facilitate the flow but to interest the reseller in the sale of his products. In this way, the salesperson, considering his profit, which is nevertheless attractive, is ready to place the merchandise on the market. Thus motivated, he will strive to accelerate the purchase because knowing that the more he sells, the less he loses. Sometimes, certain companies retain him by granting him a fixed amount in order to entice him and encourage him to boost card releases.

Blocking of expenses

This retailer incentive strategy is often accompanied by a whole dedicated language, supposed to captivate the consumer. In designing their slogans, trading companies establish communication with customers. They bluntly suggest that they only shop at home. In fact, the game is to turn the customer away from the competitor.

This way, the gift card issuer tells the customer that they only need to pay at a specific point of sale. “Me, I buy my gift cards at X …”, for example, is a tendentious but clever slogan. In truth, he tends to suggest that it is only X’s products that are better than those of others. Other messages like “I decided to do my shopping at Y” announce a new point of supply, to get consumers to change their habits or to direct them to a particular retailer.

Disinterested loans

Since the cards are offered ordinarily or in high-profile games, the assets they contain are interest-free loans. The issuing company makes a sum available to the consumer on which it receives nothing as interest for having lent it to him. Moreover, it provides for a variable increase of 25% to 50%, in case the customer should exceed the original balance. We will say that it places prepaid cards giving the right to several purchases.

However, in other circumstances, the loan pays off. A percentage payable is always applied to the refund. In the case of cards, since they are a guarantee of purchase, they are almost free, considered as an equally secure income. For the customer, this is a way to have the choice between different products to which the payment voucher entitles him. He is even given the possibility of opting for articles other than those to which he is entitled.