SACRAMENTO, Calif. - The California Senate wants to double the cash out provision for gift cards, the FoxandHoundDaily.com reports. Essentially, the bill raises the gift card redemption provision from $10 to "less than $20," requiring that a printed disclosure statement be included on each certificate or card.
As John Kabateck, the California executive director for the National Federation of Independent Business, writes, the proposed change to gift cards "is no gift for small business, especially mom-and-pop retailers." By increasing the cash-out provision, the legislature would raise "the burden already facing small business owners by expanding potential financial liabilities with outstanding gift certificates."
Such an increase would cause retailers to operate essentially like an ATM. "Additionally, when a gift certificate is purchased using a credit card, the small-business owner pays an interchange fee for the privilege of accessing the network. For the average small retail business, the purchase of a $20 gift card costs a small retail store owner about $1.00 to $1.50 when the credit company-imposed fees and other costs are counted. Now the small business must 'eat€™ 5 percent of the card value," writes Kabateck.
The increased cash-out provision would work something like this: A person with a $20 gift card uses it to buy a 25-cent newspaper, asking for the rest of the card€™s $19.25 value to be given to him in cash. "The small business owner is now out $19.25 that has already been spent to keep running their business, plus the another $1.50 for card costs. $20.75! That is one expensive newspaper," explains Kabateck.