Gift cards can be one of the most powerful features a POS can provide. Why? Because when done correctly, they make you more money. Here at SelbySoft, we are
asked daily about different gift card systems, benefits and more. Let's start by looking at the top questions you should ask a gift card provider before
Where fees are there?
This should be the most important question you ask. Hopefully, there are no swipe fees or monthly fees.
When you add fees on to a gift card, it's no better than a credit card from a cost standpoint. If there are fees, what are they? Are they charged on the initial load?
Is there a charge on the inquiry? You don't want to pay $.25 a swipe just because someone checks their balance.
Where do I get cards?
In our experience, the average coffee shop goes through 1,000 gift and loyalty cards a year. Make sure that you can
purchase cards with pricing that is comparable to the rest of the industry. Orders of 1,000 custom cards should fall between $.55 and $.65 a card for a full four color
custom card front and back. They should not be $1.00 a card! Ask if the cards are custom and if you can include information on the front and the back.
Can customers tip on the gift card?
If you take tips right now, you definitely want to know this. Not being able to take tips on a gift
card transaction can hurt your gift and prepaid card sales. Why would employees help push something that hurts their tips? Being able to have a tip on a gift card
is also something that customers like (if you accept tips with other methods). Don't make your customers feel guilty that they can't tip an
employee because they use the card.
Can you use it with other payment types?
In other words, does the gift card system allow for an easy way to use a partial payment?
You want your customer to be able to use the $3.00 on the card and then pay the rest with cash, a credit card or even another gift card. Some systems force you to know
the current amount on the card before running this type of transaction.
Is it a gift AND loyalty card?
Even if you don't plan on implementing a loyalty or rewards system, you want to make sure that the system is capable of handling it.
Being able to have the same card act as both gift and loyalty is important. Customers certainly don't want to carry two cards around. Also, make sure you
know what loyalty systems are possible. Buy 10 Get 1 free? Every dollar spent is a point? Percentage back?
Can I use it across multiple locations?
While you may not be a multi store operator now, it does not hurt to think like one.
Being able to have customers easily use their gift cards across your locations is important. If you are thinking about franchising in the future, then you need to know if your system can
accommodate corporate pooling of gift cards.
There are typically five main methods of implementing gift & loyalty systems.
Assuming a few things, a gift & loyalty system through your POS provider is the absolute best way to go. You want to make sure the gift and
loyalty system is fully integrated into every part of the point of sale. If this is the case, your gift cards become a powerful tool to help you increase your average
dollar per ticket and even become part of your marketing strategy. Done right, a gift and loyalty system through the point of sale can cut down on order times
by allowing your employee to quickly look up the last order a customer had and duplicate it. You want to make 100% certain that there
ZERO swipe fees or monthly fees on card usage. If you are being charged to run a gift card, you WILL start to resent the systm. It's a glorified credit card at that
point - fees and all!
Third Party companies (ValueTec, Givix, etc)
If your provider wants to push the cards through a third party, that typically will come with two negatives. First, it can mean that there
is a separate piece of equipment that will be used (think a side terminal). If you will be doing the gift and loyalty through a separate terminal, then be aware that there may be some
challenges with using the gift cards. The issue is that most of those terminals do not integrate with your register or POS system. You employees
will have to manually enter the gift card load and sale amounts and that can lead to problems with mistyping the amounts
If your provider has an interface with the third party company that is great. You then need to verify that there will be no fees for swiping and no monthly surcharges
for the use of the system. Any fee (especially swipe based) on a gift card hurts the reason to implement them. If there are no extra fees, you then need to see if the
gift card system is fully integrated into the system. In most cases, the gift and loyalty system through a third party will not work with the marketing side of things.
Credit Card Processor
This is usually one of the worst methods of gift card processing. Most credit card processors will chagre a swipe fee
and/or a monthly fee.
A much bigger concern is that by credit card processor for your gift cards, you are giving up control. If the credit card processor does not charge you
for the gift card system, they still own the data. This method can severely limit your ability to negotiate your credit card fees or to swap to a merchant processor that
will charge you less. If you decide to leave that processor, what do you do with your gift card system?
It's not 1995 anymore! In all seriousness, gift certificates and manual punch cards can cause serious headaches for you.
Paper gift certificates require that your employees manually calculate the remaining balance for each transaction. This leads to mistakes that cost you money. Paper gift
certificates can easily be duplicated and are hard to track. Knowing your outstanding gift liability is virtually impossible.
Manual punch cards will lead to double stamping or punching and are troublesome. Often the double stamping can come from employees simply not sure if they already stamped
the card for a customer. They are also very time consuming in a busy shop.
There are some apps that can work as a reward system. The biggest issue with most of them is that they are not YOUR app. They
are typically branded for the app company and designed to push the customer towards their brand. Additionally, most of them work with multiple locations.
That means you are potentially giving away product to stores in town that are not owned by you.