How Can I Accept Gifts Cards For My Business?

It’s simple really. As long as you have a merchant account, you can accept gift cards from your Point-Of-Service terminal, or through most ecommerce processing programs. But before we cover the specifics, you have to understand how the different types of gift cards work. There are basically two types of gift cards:

  • 1. A card-branded gift card carries a Visa, MasterCard, or other credit card association logo on it. It has a set balance and can be used just like a credit or debit card to pay for purchases or services up to the limit of the pre-set balance. This type of gift card can be used anywhere these credit card brands are accepted. A card-branded gift card is not to be confused with a pre-paid credit card. Gift cards are a non-reloadable prepaid card. It’s purchased for a set amount, activated upon purchase, and may be used anywhere until the balance is depleted.
  • 2. The other type of gift card is referred to as a “self-branded” card. This category of gift cards includes small business gift cards, restaurant gift cards, and large retail store gift cards. In other words, the card carries the name of the business that issued it, and can only be used for purchases and services from that business or business brand. These cards also work like a credit or debit card but only to pay for purchases from the issuing business up to the limit of the balance.
  • The difference between the two types of gift cards is clear. One can be used anywhere, and the other can only be used at the named business, or any one of its outlets. Though there’s a distinct difference between where these types of gift cards can be redeemed, the process for how they are redeemed is essentially the same.

    All gift cards are processed through the merchant account provider that handles your credit card transactions. That said, there is one basic difference in the set-up process for redeeming self-branded gift cards. Let’s take a closer look.

    How To Redeem a Card-Branded Gift Card.

    Card-branded gift cards are similar to debit cards in that the amount of the transaction is automatically deducted from the balance available. There is no need to add any program to your POS terminal since these cards are issued by the credit card associations and can be processed like any debit card, and they have the lowest processing transaction fees. However, these gift cards do not come with a PIN. If your customer is swiping his card at your point-of-purchase terminal, be sure he pushes CREDIT on the keypad, and signs the sales receipt to complete the transaction.

    Card-branded gift cards are sold with different cash values. When the card is swiped (or the information is input), your acquiring bank sends the transaction to the issuing brand association for authorization and payment. If there’s enough balance to cover the purchase, the transaction is approved and the amount is deducted from the card balance. If the balance is not sufficient to cover the purchase, the amount that is left goes toward the purchase, and your customer must use another method of payment to complete the transaction.

    How To Redeem a Self-Branded Gift Card.

    Self-branded gift cards have some definite advantages for merchants. Obviously, they’re a good marketing tool because they’re self-promoting and they encourage customer loyalty. As with card-branded gift cards, self-branded gift cards are processed through your credit card processing terminal. However, you will need to add gift card program software to your POS terminal or ecommerce payment process in order to track your gift card purchases. This program can be setup and monitored through your credit card processor or can be managed by a third-party company that specializes in designing gift card programs.
    Processing is simple.

    1. 1. Your customer purchases your self-branded gift card. This card can be paid for with cash or with a credit card.
    2. 2. By swiping the card in your payment terminal you activate the card and add the purchased amount to the card.
    3. 3. Then, when the recipient of the gift card uses it to pay for a purchase at your business, the program deducts the amount from the card and prints out a receipt for you and one for your customer with the information about the sale and the balance left on the card.

    Why Do Merchants Benefit From Accepting Gift Cards?

    There are several major benefits to accepting gift cards, especially self-branded cards. Customers rarely spend the face amount of the card. Remember the last time you received a gift card for some special occasion. Let’s say you received a $75.00 gift card for your birthday. Did you go into the store and spend $75.00 on a pair of athletic shoes, which would get you a decent pair, right? Or did you splurge on that high-end name brand that cost $100.00, spending more than you would otherwise spend if you were paying the whole tab yourself? You got the name brand you wanted and only had to pay a small portion of the total cost.

    You’re happy and so is the store owner. The merchant gets the value of the gift card, whether from the original sale of the gift card or from the bank that issued the card, and another $25.00 from you to complete the sale. In fact, studies show that shoppers often spend as much as 30% more when they have a gift card to pay for their purchases. As the merchant, that’s profit you can’t afford to miss out on.

    Studies also show that a number of shoppers don’t use the whole balance of their gift card. Maybe they put it away to use to make a purchase another day and forget about it. Or maybe they’re just not motivated to go looking for something that only costs a dollar or two to use up the balance. That money represents clear profit for the merchant.

    Gift cards can generate brand awareness and increase your customer base. They can promote customer loyalty and increase sales. They eliminate cash back for returns and encourage customers to return to spend their credit. And best of all, gift card transactions have low or no credit card processing charges, while tracking sales and providing you with important marketing information. Accepting gift cards is no longer a marketing strategy reserved for large businesses. When it comes to accepting gift cards for sales transactions, it’s now a simple process with tremendous benefits to companies large and small.