Small Businesses Embrace Gift Cards

Merchants like the low set-up costs and high customer demand for the prepaid cards.

June 09, 2010

SANTA MONICA, Calif. - Small retailers are finding that gift cards can mean big business, the Los Angeles Times reports. Merchants, such as day spas, bakeries and even plastic surgeons, are enjoying the fruits of selling prepaid cards, which are popular with consumers and inexpensive to set up.

"Small merchants are finally seeing that gift cards are offensive weapons," said T. Jack Williams, president of Paymentcard Services Inc. "They are beginning to understand the cards can drive the incremental sales that are key to survival in this economy."

Around 8 to 10 percent of small and mid-size retailers offer gift cards, according to Gregory Grove, president of ECard Systems Inc. In 2008, that number hovered around 2 percent, he said.

The gift-card industry is just "at the beginning of that process, rolling out into the small-merchant marketplace," said Grover.

One such convert is the Hennessey & Ingalls bookstore, which switched to gift cards two years ago. "I could probably go a whole month without selling a gift certificate," said owner Mark Hennessey. With the store??s gift cards showcased right by the cashier and advertised online, more customers purchase the cards.

Some estimate that the U.S. gift-card industry takes in approximately $87 billion in sales in 2009.

For more on the prepaid card market, read "Paper, Plastic or Virtual?" from the May issue of NACS Magazine.

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