In the digital age, we are often surprised to see how our streaming, cellphone and cable bills continue to climb each year. We meant well; We started with the very reasonable basic package only to find ourselves, just six months later, with exploding fees for all the extra features. Those “small,” yet recurring fees sneak up on you and add up quickly. If you are like me, not watching those fees closely, you will find yourself spending a great deal more than you ever imagined.
The same can be said about transaction fees paid by retailers. Most start out well intentioned and customer focused, providing the services that differentiated your store brand and helped your customers do more business with you; adopting services like loyalty points, credit authorization, and gift cards. Fast forward, and you are now ten, twenty, thirty years invested with these transactional services – only to find your bottom line more eroded each year, and your costs to consumers inflating. Adding insult to injury, these transaction fees are now all associated with services that no longer provide a key differentiation for your retail store, since your competitors provide identical offerings. Compounding this problem, it feels like every 3-6 months a new third-party service is gaining in popularity. You are now faced with a decision to add yet another service and transaction cost. So, year after year, this becomes a bottomless transaction fee hole.
Our experience shows an effective place to start is by eliminating the third-party fees associated with in-store and virtual gift card fees…
Is it time to fight back, slow down the rate of increase, and even reverse the downward spiral? You know the old saying: “if you find yourself in a hole, the first step is to stop digging.” Our experience shows an effective place to start is by eliminating the third-party fees associated with your in-store and virtual gift card fees. Instead of using a third party, why not host the service yourself? Unified transaction systems, like ECRS’ CATAPULT®, have secure dynamic self-hosting capabilities for in-store gift cards and even virtual e-gift cards. If your enterprise is going to host your own gift cards, here are a few features essential to differentiate and save money:
- No transaction fee, this means zero: Remember, the first rule is to stop digging the transaction fee hole. No matter how cheap the fee is now, it always grows over time. Your transaction system should support fee-less gift cards, or you have the wrong transaction system.
- Non-sequential, PIN- (Personal Identification Number) Based Physical Cards: If you are going to sell physical gift cards in your store, be sure your system supports a rub off PIN (Personal Identification Number) and non-sequential account IDs. This will make the card and the system dramatically more secure.
- Automated Physical PIN Card Reorders: Managing the reorder of new physical gift cards, for your store locations, can be tedious and time-consuming. That is, unless your system can automatically generate the reorder files with the required non-sequential PIN. This is an under-appreciated and must have feature if you want to eliminate the workload and management associated with ordering and reordering new secure physical cards.
- Avoid Processor Lock-In: Be sure you can extract account numbers and balances from any gift card solution, so that you are not locked into a specific application or processor.
- Online or In-Store: Be sure your system will allow you to sell a gift card online and allow for redemption in-store and/or online. Just as important, gift cards purchased in the store should be redeemable online.
- Consider Issuing Non-Plastic Cards: Now that you oversee your own gift card service, why not help the environment, and connect better with environmentally conscious consumers by issuing non-plastic cards?
- Support e-Mail eGift Cards: Nothing beats the no transactional cost and convenience of allowing your gift card buyer to do so online and to have the gift card delivered now, or at a later date, via email, with a message from the sender. Just as convenient, the recipient can use the gift card immediately, from their smart phone, online or in the store. E-mail gift cards cost your company nothing to produce. In addition, e-mail gift cards have a near zero impact on the environment, which you could message to better connect with environmentally conscious consumers.
- Item Level Purchase Control for College Students: Offer gift cards that are only redeemable for certain items. Imagine a parent buying an email e-gift card for their first-year college student. The parents’ intent is for their child to have access to affordable healthy foods, but not so much your stores wide selection of micro brews. Purchase controls are a fantastic way to differentiate your offering. Best of all, you have a key demographic (An up-and-coming potential high earner) who is now learning to love your store, now what could be better than that? *
- Item Level Purchase Control for Charitable Giving: Allow a local church and charities to hand out a gift card that can only be used for food and baby products. *
- Stored Value Card: The ability to add additional dollars to an active fee-less physical card is a fantastic way to provide cash back rewards to customers, particularly if you can limit which items can be purchased with the reward.
- Streamline Returns: Issuing a fee-less gift card is an ideal way to provide a lower cost credit back to a customer for returned merchandise.
There are many ways to fight back against transaction fees. In-store Gift Cards are a good start and worth your time to investigate. Why not make 2023 the year you stop digging, and instead start down a new path of lowering your costs while also improving your offering?
*Available in CATAPULT cycle 4 release.
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